New York's senior U.S. senator says the compromise on student loans Congress is scheduled to take up on Tuesday is a good one, even if it's not exactly what he wanted.
Interest rates on government issued subsidized student loans doubled on July 1, after Congress failed to renew the program. But late last week, several lawmakers announced a compromise that will bring rates back down, at least for now.
Sen. Charles Schumer, a Democrat, discussed the compromise during a stop in Syracuse Monday morning.
The government was holding the interest rate on subsidized Stafford loans at 3.4 percent, but that rate expired at the end of June and new interest rates of 6.8 percent went into effect. "It was outrageous" to let the loan rates go up, Schumer said.
"It was just so unfair, particularly because college is so important for our young people," he added. "You know, it’s been shown if you have a college degree, you have a much better chance of getting a job."
The compromise announced last week will tie the rates to the 10-year Treasury note, much the same way car or home loan rates work. That means rates right now will drop back below 4 percent, but they could easily rise above 6.8 percent as the economy improves and the Treasury ups the interest rate.
Congress will cap the rate at just below 10 percent for students.
Schumer explained the stalemate came down to political gridlock. More conservative lawmakers didn’t want the government to aid with loan rates. Some liberal members wanted them to be closer to one percent. He says he had sympathy with the liberals, but that the compromise is a good one.
The huge outcry from students and their parents pushed members of Congress toward compromise, Schumer said.