☛ Who Decided to Raise the Interest Rate On Student Loans? VIDEOSubmitted by Barracuda_Trader on Wed, 04/25/2012 - 13:18
Q: Why is the interest rate on subsidized Stafford loans expected to double?
A: Acting on a Democratic campaign promise in 2006, Democrats in 2007 crafted the law to progressively lower the interest rate from 6.8 percent to the 3.4 percent rate — where it is this school year — and then return to the original 6.8 percent in 2012. Republican President George W. Bush signed the deal into law after it was approved by bipartisan but Democratic-heavy majorities in both chambers. Congress wrote the law this way for one simple reason, says Jason Delisle, director of the federal education budget project at the New America Foundation: cost. It would cost an additional $6 billion annually to keep the interest rate at 3.4 percent.