Higher Student-Loan Interest Rates Could Have Political Costs

Higher Student-Loan Interest Rates Could Have Political Costs  Higher Student-Loan Interest Rates Could Have Political Costs 1

Susan Walsh, AP Images

Hopes for a bipartisan plan in the Senate foundered over worries that the proposal did not cap how high interest rates could rise in future years. Two Democratic senators, Jack Reed of Rhode Island (left) and Tom Harkin of Iowa, outlined their objections during a news conference on Thursday.

If interest rates on federally subsidized student loans double on Monday, as expected, the biggest loser may not be students. It could be Senate Democrats.

Sure, student borrowers will suffer if Congress lets the rates go up on new loans to undergraduates, but not as much as the alarmist rhetoric (and some inaccurate news reports) would suggest. And there is still time for Congress to fix the rate retroactively, before most students sign their loan documents.

Senate Democrats,