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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