On July 1st, the reduced interest rate on federal subsized student loans will expire, resulting in the interest rate reverting to 6.8%. The interest was gradually reduced between 2008 to 2011, as part of a 2007 bill. Currently, both Democrats and Republicans support extending the interest rate reduction. However, up until now the two parties were locked in a stalemate on how to fund the one-year extension. While Republicans wanted to tap into Obama’s health care prevention fund, Democrats sought to end a loophole in the tax treatment of S corporations. Currently, both parties appear to be reaching an agreement that would fund the extension by raising premiums for federal pension insurance. Now, Senators must decide how to accelerate the proposal through Congress before the deadline. The following infographic desribes how this decision impacts the average undergraduate borrower.
Designed by undefined