(Thisisbossi/ Creative Commons)

The current 3.4% interest rate of federally subsidized student loans is set to double to 6.8% at the beginning of next month, unless Washington can set aside partisan politics to address the imminent interest rate hike.

If this topic sounds familiar, that’s because student loan interest rates were set to double last year as well. During the first few weeks of the 2012 campaign, President Obama visited college campuses in swing states to raise public consciousness on the interest rate hike scheduled to take place that year.

The combined efforts of the Obama administration and numerous student groups managed to successfully convince Congress to pass a 1-year extension of the low 3.4% student loan interest rate, but July 1st marks the end of that 1-year extension.

In response to the impending rise in student loan rates, a variety of new legislative ideas on how to tackle interest rates and manage student debt were recently proposed across the political spectrum.

The legislative process remains stuck in gridlock as differing viewpoints compete for support, casting a doubtful light on which, if any, proposal on student interest rates will sustain enough votes to become law before July 1st.

Many of these proposals have conflicting ideas on how to avoid increasing student loan rates: Obama threatened to veto a bill proposed by the Republican-led House of Representatives on Wednesday, according to Reuters.

The Congressional Research Service, Congress’s non-partisan think tank, released a study estimating the results of the legislation proposed by the House of Representatives. The results revealed that, if in effect, the Republican-led House’s legislation would do more harm than good – undergraduate and graduate students would pay more under the House’s proposal than they would if Congress did nothing at all on July 1st and allowed the interest rates to double.

In a public address at the White House, President Obama criticized the House Republicans’ proposed legislation. “It fails to lock in low rates for students next year,” said the President. “The House bill isn’t smart, and it’s not fair.”

However, Obama’s plans for student interest rates are not flawless either. The White House plan, revealed during the 2013 budget request, implements fixed interest rates over the lifespan of every individual student loan and ties the loan interest rate with the U.S. Treasury note’s interest rate, but fails to set a limit on how high student loan interest rates can rise. 

In effect, the Obama administration’s proposal provides substantial short-term benefits to students since the U.S. Treasury note’s interest rates are at historic lows. But, if the White House plans were to be applied, there’s no telling how high interest rates can go.

According to the Atlantic, there were multiple times in the past 2 decades when U.S. Treasury rates fluctuated considerably – a situation with significant fiscal repercussions for financially challenged students under the Obama administration’s proposal.

Despite their numerous differences, most of the existing proposals include clauses that tie in student loan interest rates with Treasury note interest rates, a move that seems to be aimed at taking counterproductive partisanship out of legislative decisions on federally subsidized higher education.