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We are all aware of the possible inflation of student loan rates of interest. As the deadline approaches, no feasible approach has been agreed upon by the Congress to help students complete their college education by managing their money in an effective manner.

Sen. Elizabeth Warren has put forth a proposal on the table in support of schools in the Boston area. This proposal aims at preventing doubling of student loan interest rates. She requests for rates equal to what is offered for banks and other financial institutions.

The jumping of loan rates from 3.4 to 6.8 per cent from 1st July is a serious threat to our economic recovery, says Warren. She opines that while Congress takes its time to devise a fair and feasible solution, students must be given loans on rates that banks pay for borrowing from federal reserve which is somewhere around 0.75 per cent.

Though the rates will inevitably increase sometime later, they will be stalled by a bill passed by the House of Representatives controlled by the Republicans. Our president has promised to veto the bill. In a statement Warren points out that as compared to what the banks pay for government loans, students are paying at least nine times more which is totally unfair, she said. 

She opined that rather than increasing student loan rates to such an extent that they are forced to discontinue, we should invest in their education and encourage them. This is the only way to help our middle class grow and strengthen our economy.

Warren spoke at the Fairness Act promotion event at Boston. Many of the local colleges and universities including Babson College, Emerson College, North-eastern University, Boston College, Brandeis University and Bentley University have pledged support to Warren.

Babson College president wrote a letter to Warren where he states that all college presidents have a responsibility to maintain affordability as this is the only way we can be assured of more number of students graduating quickly. $23.8 million was provided last year by the school as institutional aid for needy students said Schlesinger.

It is most unfortunate to find that the job market today is very tough and graduating students are facing a huge dilemma. It is imperative to ensure that these students are able to pay back their student loans easily by keeping the interest rates down. Thousands of students will be at a risk of defaulting on their payments if the doubling of interest rate happens as per schedule in July. 

This proposal was welcomed by many local organizations willing to stand behind her. The legislation put forth by senator offers an intermediate, clear solution to the problem of doubling interest rates.
According to AICU president Richard Doherty, the best thing to do in the current tight economic situation is to keep interest rates on student loans affordable and low. As the deadline is round the corner, it is imperative to take up this issue immediately after the recess this week and bring about helpful measures.