

Congress fails to act on time

5:41 PM, Jul. 8, 2013  |  Comments
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Members of Congress left for a summer break last week without finishing their homework.

If this was college, they'd be graded "Incomplete." But this is Congress, not college, and the members must not remember what it was like to be in college. Certainly, most wouldn't know what it was like to be carrying college debt of $27,000.

That's the average student loan debt that a college graduate leaves school with these days. That's about to get worse, as the interest rates on many of those loans is doubling due to Congress' failure to act.

A year ago, Congress passed a one-year extension of low 3.4 percent interest rates on federally subsidized Stafford loans. That extension expired July 1. Without Congress passing another extension, interest rates on new loans will double to 6.8 percent.

When Congress returns to D.C. Wednesday, one of its first orders of business should be to pass another extension of the low interest rate, and make it retroactive, to save money for millions of borrowers.

The new rate will affect only new borrowers of Stafford loans.

But colleges will be starting up in less than two months and students are figuring out how they will pay for it. This may end up being insignificant, but Congress must act.

By refusing to act, Congress left in place the fixed 6.8 percent interest rate that it passed way back in 2001. But today, home buyers can get 30-year mortgages for just more than 4 percent and auto loans for less than 3 percent. College students who already are pressed to pay for their educations, shouldn't have to pay more in interest than a car buyer.

But the more bothersome aspect is that this dysfunctional Congress couldn't agree on a common-sense extension of a law that they already extended a year ago.

What changed in that year that caused legislators to freeze this time? If anything student loan debt has only worsened.

More likely, politics is the problem. Senate Republicans and Democrats were unable to reach a long-term deal on student loan rates, and instead did nothing.

Unless they fix that, the people hurt will be students working to get into the economic mainstream and taking on debt in hopes of a future return.

The average student loan debt in 2001 was more than $27,000 for graduates with four-year degrees. That's risen 83 percent since 1993, when the average was about $15,000 (in today's dollars).

Most four-year graduates - 65 percent - start life after college with some student loan debt. In 1993, only 46 percent did.

Paying off college debt means young graduates have less money to buy homes, cars, get married and just make ends meet. That hurts the overall economy.

Congress needs to finish its homework and do what's right.

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