Sen. Kay Hagan told reporters today that senators should vote for a bill she's sponsoring that will extend the 3.4 percent interest rate on federal subsidized student loans for another year. That will give Congress time to "really come to terms with this issue and figure out a solution that Democrats and Republicans can support, that's good for students and the economy," Hagan said, according to Renee Shoof of The N&O's Washington Bureau.
The interest rate on subsidized federal student loans went up from 3.4 percent to 6.8 percent on July 1. That means the average student will pay $1,000 per year of taking out loans over the life of the loans.
"Our students cannot afford this interest rate hike and our economy can't either," Hagan said in a conference call with reporters.
Hagan is the co-author, with Sen. Jack Reed, D-R.I., of a bill that would extend the 3.4 percent rate on subsidized student loans for another year. It applies retroactively to July 1, when the rate went up from 3.4 percent to 6.8 percent under the law. The Senate plans a procedural vote tomorrow on it, but will need 60 votes. It's not clear what the prospects are.
Hagan said 176,000 North Carolina students are affected. The new jobs that the state wants to create in technology and advanced manufacturing all require some education beyond college, she added. The loan hike affects students taking out loans to attend community colleges as well as four-year institutions.
Sen. Richard Burr is a co-sponsor of a bipartisan bill in the Senate that would peg the rate to the 10-year Treasury note plus 1.85 percent for subsidized and unsubsidized undergraduate loans. It's similar to an approach in the House and in President Barack Obama's 2014 budget plan. So far, there's no word from Speaker Harry Reid's office that there will be a vote on it.
Hagan says there shouldn't be. She said in a conference call with reporters that it hasn't been discussed in the Senate education committee, which she serves on, and that it would let rates go up too much in the next five years. She said it also would "begin making profits off our students."
"Increasing the debt on our students is not the way to pay down the deficit," Hagan said.
'Hagan's extension plan would cost $4.6 billion for one year. It would be paid for by a change in the way taxes are paid on inherited IRAs and 401K plans.