By: Cody Nelson
Congress is back to the drawing board in passing a bill to address the student loan crisis.
After a tentative agreement to lower recently raised student loan interest rates garnered bipartisan support, the Associated Press reports a $22 billion price tag has made lawmakers shoot the plan down.
Officials were considering a deal that would have tied the interest rates on new student loans to the 10-year Treasury note, plus an additional percentage to account for administrative costs, the AP reports.
But with a cap of 8.25 percent for future years, that plan proved too costly after an analysis from the Congressional Budget Office.
More than 14,300 University of Minnesota students took out subsidized Stafford loans in 2012, collectively worth about $54.7 million.
If Congress doesn’t act soon, Congress’ Joint Economic Committee says it could cost an extra $2,600 per student for those taking subsidized Stafford loans this fall.
Interest rates on the subsidized Stafford loan, the most common federal student loan, jumped to 6.8 percent on July 1 after Congress failed to act before its deadline.
Many different proposals floated around Congress in recent weeks, but none of them passed.
A Democrat-backed bill to bring the rates back down to 3.4 percent, the level for the past two years, failed on Wednesday in a close vote that fell mostly along party lines.
Yesterday’s failed plan was similar to a White House-backed plan and to a Republican bill, which passed the House in late June but didn’t get Senate approval.
The University of Minnesota has expressed support for a market-based plan on student interest rates.
"I am very glad that Congress has continued to work on this issue and appears to be prepared to put into place a long term fix which protects both students and tax payers,” University Student Finance Director Kris Wright said in an email on Thursday.
But it’s now unclear if Congress will look into a long-term solution or push for another extension of the 3.4 percent subsidized interest rate like they did in 2012.
For University student reactions to the student loan crisis, pick up Wednesday’s Minnesota Daily.
-The Associated Press contributed to this report.