Interest rates on student loans set to double

On July 1, the interest rate on student loans is set to double from 3.4 percent to 6.8 percent unless Congress is able to extend the lower rate.

Last year, Congress was able to hold off a similar increase, but now they will be forced to come up with another solution.

On Tuesday, a collaboration of student advocacy groups released a brief addressing the issue, stating that the federal government is earning billions of dollars through student loans and that this increase in interest will only make that number go up.

If Congress cannot stop the hike in interest rates, the government is estimated to make roughly $36 billion from student loans this year, according to the brief.

This issue is a rare bipartisan one. During the presidential campaigns in 2012, both President Barack Obama and Republican opponent Mitt Romney supported lowering the interest rate and developing a better future for students with loans.

If the rates increase, students will be paying $1,000 more per loan, per year. Somewhere around 7 million students have loans, and this interest rate hike would undoubtedly increase the already burdensome rate of student debt nationwide.

The brief—released by the U.S. Public Interest Research Group, a collaboration of nonprofit, nonpartisan public-interest advocacy organizations—said the president is expected to release a complete student loan reform proposal sometime this week.

“Rates on educational loans are excessively high compared to those on mortgages and other consumer loans,” said Tiffany Dena Loftin, president of the United States Student Association, in a press release.

“Higher education should be more affordable than it is, and we need our political leaders to respond.”