Congress reached a pivotal decision Friday, June 29 regarding the freezing of subsidized student loans. Congress approval will benefit college students, as the loan freeze will last a year until July 2013, according to The Washington Post.
Federal subsidized student loan rates will remain at 3.4 percent for another year, rather than leaping to a staggering 6.8 percent. This arrangement could save money for more than 7 million students, according to The Washington Post.
Democrats and the Republicans remain concerned about the source of the money that will fund the student loan freeze. Senate Majority Leader Harry M. Reid (D-Nev.) proposed the $6 billion cost of the freeze would be taken from raising premiums for federal pension insurance- a part of the benefits that companies offer employees. The approval of the freeze will undoubtedly change business pension policy.
Freezing student loans is vital so that students will incur less debt. In coming weeks, information concerning the loan freeze and federal pension insurance will likely be demanded. With the fall semester looming near, students and their parents will inquire more information about the freeze. Meanwhile, fear may strike the hearts of business owners due to uncertainty surrounding federal pension insurance. Small business owners may reveal to employees that their pension will suffer due to the loan freeze.
Small businesses are extremely worried about how the loan freeze will affect them. It is predicted that they do not want pensions raised. Honestly, who can blame them?
The loan freeze will trigger a cap on how much students will be able to borrow. The cap will now be on 150 percent of the span of a college program, which is generally four years. As the Post explained, students in four-year programs will only be able to get loans for six years. Several programs around the globe are listed as “four-year programs,” but would realistically take a full-time student five to six years to complete.
The loan freeze affects several groups, primarily students and small business holders. But it will inevitably have an effect on education and the economy.
Brittany Reese is a freelance writer studying mass communication at Arkansas State University. Follow her on Twitter @brittayus.
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All this talk about business being affected and the economy is pure nonsense. The country is thinking moreso short term than long term. Students are the future innovators of the world. If you set up road blocks, how can you expects future Steve Jobs and Bill Gates to come into the world. I am surprised this will only last yr. I hope when nexr yr comes around, Congress will renew again. I have a cousin who was considering to forgo his education to rising costs. He is extremely intelligent. The government needs to reconsider their stance on education.
Thanks Obama for putting us in a financial crisis. Obummer doesn’t know how to run this country. He’s only running it into the ground. We need to true change. Guess what kiddies, your president’s obama care is going to make student loans rise into the stratosphere, just you watch. When this happens tell me what you think about your savior of change policies. Let’s vote Mitt Romney to get the country back on its feet