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Direct Federal Student Loans

Twitter Chat

View highlights from BPC’s Twitter chat on the impact of the scheduled interest rate hike on subsidized Stafford loans.

The Issue

We are fast approaching June 30—the date on which the current 3.4% interest rate for subsidized Stafford loans is once again set to expire. If Congress does not act, this rate will double to 6.8% for new loans, affecting millions of student borrowers. Numerous proposals are currently being considered regarding how to approach the impending expiration date. Substantive, yet bridgeable differences exist between Democrats and Republicans.

The Background

Question: What is a direct federal student loan?

Answer: Direct federal student loans are funds borrowed directly from the federal government to help students and their parents pay for higher education. These loans have low interest rates and offer flexible repayment terms, benefits, and options. Today there are over $553 billion in outstanding direct student loans. In 2013, 21.5 million direct loans will be made at an average of about $5,000 per loan.

Read the full briefing

Benjamin Kramer contributed to this post.

The Common Ground Project provides you with real-time insights into key issues before Congress, what’s holding back passage of legislation, and where there might be common ground.

2013-06-03 00:00:00
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