WASHINGTON — The interest rate on subsidized federal student loans will rise from 3.4 percent to 6.8 percent next week because the Senate has no plans to vote on the issue before a Monday deadline, the start of the July Fourth congressional recess.
But supporters of a bill by Sens. Kay Hagan, D-N.C., and Jack Reed, D-R.I., that would extend the 3.4 percent rate for another year, said Thursday that their plan would get a vote July 10. If it passes and becomes law, the measure would reduce the rate retroactively.
Supporters said the bill had the backing of 35 Democrats; it would need 60 votes to avoid a filibuster under Senate rules.
A bipartisan group of senators is pushing an alternative bill that would permanently tie student-loan interest rates to the 10-year Treasury note borrowing rate. President Obama similarly suggested a market-based plan in his 2014 budget proposal. Neither sets a cap on how high the interest rates on loans that students take out may go.