House and Senate Nearing an Agreement on Student Loan Debt

According to the advisers of President Barack Obama and the Congress, both parties are heading toward an agreement on how to pay the measure’s $6 billion price tag, which is the cause of the argument.

The objective is to move the legislation forward through Congress in the subsequent week so that the existing 3.4 percent interest rate on Stafford loans can be sustained for an additional year. While a 2007 regulation decreased the interest rates on the loans, it was required to increase to 6.8 percent this July 1 in a cost-saving strategy.

In addition, the two parties are closing in on a deal to fix federal transportation programs, said to the House and Senate advisers from the two parties. Discussions are anticipated to go on during the weekend, with votes projected next week on either a transportation bill or an expansion of existing programs.

President Barack Obama said during his weekly radio and Internet address last Saturday that they only have seven days left before thousands of American employees walk out of their jobs because a transportation bill has not yet been passed by the Congress. Moreover, they only have eight days left before approximately seven and one half million students witness their loan rates increase twice as much because Congress has not done something to end it.

Based on data from the Education Department, 7.4 million students are anticipated to receive new Stafford loans in the current year starting July 1, with each having an average debt of $4,226. Increasing the interest rates to twice as much would add more or less $1,000 to average loan costs, which are paid off by students for 10 years or longer.

In the previous month, the Federal Reserve Bank of New York said that student loan debt increased this 2012 to a total of $904 billion, although other types of loans are going down.

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