Local Democrats are running hard with this one. For example, Congresswoman Anna Eshoo was at Foothill College. Barbara Lee was at Cal. On Thursday, Zoe Lofgren will be at San Jose State University. A lot of students could be affected by this. According to the Department of Education, 30 percent of undergraduate students have this specific type of loan.
More than 700 Foothill College students have a subsidized Stafford student loan. This means the interest rate is at a low 3.4 percent, but when they apply for next year, the rate would double to 6.8 percent. That worries Ashley Oropeza, who will now transfer to a costly private university and must take out a loan. "Stafford loan is the only option and you get that because of the low interest rate. So, it's something that's doable. Increasing the interest rate would only make education harder," she told ABC7 News.
In 2007, Congress passed a law which lowered the interest rate on a subsidized Stafford loan to help families earning less than $50,000 a year. The Democrats and the Republicans agree it would be a mistake to let the law expire. "So much is at stake. W wouldn't want the difference between 3.4 and 6.8 to be a deal breaker for our students," Foothill College President Judy Miner said.
However, the two parties are at odds when it comes to finding a way to continue funding the subsidy. House Speaker John Boehner suggests using preventive health care monies. President Obama has traveled to different states attacking that idea. "Frankly, I think this is beneath the dignity of the White House and his campaign ought to be reimbursing the treasury for the cost of this trip," Boehner said.
The president is now sending congressional Democrats to push his plan. Congresswoman Anna Eshoo spoke at Foothill Wednesday. "I have a suggestion. Why not roll back the subsidies to big oil and big gas in the country and pay for this," she said.
Students are hoping that an agreement is reached before the July 1 deadline. "One of my concerns is definitely how am I going to pay this off once I graduate and once I enter the career world," Oropeza said.
According to Eshoo's office, if the interest rate on these loans doubles, it would mean an additional $1,000 of debt per year, per student.