On July 1, interest rates on some federal student loans are set to double from 3.4 percent to 6.8 percent.
It’s the same hike that was set to take effect last summer, but Congress passed a bill to keep rates from rising. That law is set to expire next week, and Washington still has not reached an agreement.
Congressman Peter Welch said Vermont will be especially affected, with the seventh greatest student loan debt in the country.
“I’m supporting legislation in the house that would maintain the 3.4 percent rate for two years, ” he said.
Welch said the plan could be made affordable by eliminating tax breaks for profitable oil companies.
And he said some of the other proposals might drive interest rates even higher by setting a variable rate rather than a fixed rate.
Welch says rising education costs exacerbate the problem.
“The cost of college education, which is an ongoing concern, has gone up 27 percent in the past five years. That’s much higher than inflation, and much higher than many other things that everyday people have to buy. This is the gateway to the middle class, but we’re pricing it out of reach,” he said.
Welch says if the new rates do go into effect next month, it could cost more than 20,00o Vermont students about $1,000 each in increased interest.
