With less than two weeks before its August recess, Congress appeared to be close to a deal Tuesday on student loan interest rates, but one of Connecticut’s senators is part of a group of Democrats who say the compromise doesn’t do enough for students.
The group, including Connecticut Sen. Richard Blumenthal, opposes that plan and says it would still cost students too much, especially if market rates rise in future years as the economy recovers.
Blumenthal, a Democrat, told Capitol Watch on Tuesday that the federal government was already making millions in profits from student loans before rates rose this month. He said that increase interest rates at all will have the effect of making college less affordable.
“We’ve reversed the historical approach to student loans, which was that we should be financially supporting young people who want to better themselves and the country,” Blumenthal said. “Now the nation is trying to profiteer at their expense, if this bill passes.”
Student loan interest rates doubled from 3.4 percent to 6.8 percent on July 1. Now President Barack Obama and several key Democrats in D.C. are rallying behind a proposal to peg loan rates to the open market.
At the current rates, the plan would bring interest rates back down to about 3.8 percent. If market rates rise, the plan would cap interest on student loans at 8.25 percent.
The Senate could vote on a new plan for student loan rates as soon as this week.