Congress voted Friday to extend low expiring student loan interest rate for another year, a last-minute decision for the July 1st deadline. The extension will keep Stafford student loans interest rates from doubling from 3.4 percent to 6.8 percent.
The House of Representatives passed the bill earlier this morning, and the Senate passed the bill with a 74-19 vote.
“It’s a very positive thing for those [students] that already have subsidized loans,” says Deborah Santiago, co-founder and vice president of policy and research for Excelencia in Education.
According to CNN Money, President Obama brought national attention to the extension in April and Republican presidential candidate Mitt Romney also said he supported extending the lower rate, which prompted Congress to get serious about finding solutions.
This bill is part of a larger package, which includes transportation re-authorization and flood insurance legislation. Yet, some conservative groups gave the bill a “no” vote in emails on Thursday.
“This massive bill spends too much money, will continue taxpayer bailouts for highway spending and keeps subsidies that have contributed directly to skyrocketing tuition rates,” said Club for Growth spokesperson Barney Keller, according to Time Business.
Santiago says an increase in interest rates could have had a detrimental effect on graduation rates.
“If they end up having to work while going to school so they don’t have to take out a loan, and we see that with Latinos already, it could have an effect on them,” she says.
Though Latinos are less likely to take out loans, Santiago says it is important to keep a pragmatic view on them.
“Financial literacy and awareness of the type of loan and different repayment methods should be tied to the students’ career choices,” she says. “That’s an area I hope we can improve.”