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Student Loan Interest Could Double

WASHINGTON (AP/WMOT) — Senate Democrats are expected to introduce a bill this week that will keep interest rates from rising for millions of students with federal loans. Republicans are balking at a tax boost Democrats want to use to pay for it.

Senator Harry Reid unveiled the nearly $6 billion proposal yesterday after it was endorsed by both President Barack Obama and GOP presidential rival Mitt Romney.

Republicans favor keeping the current 3.4 percent interest rates for subsidized loans from doubling in July, but don’t want to pay for the bill by making some companies pay more Social Security and Medicare payroll taxes.

LeAnn Eaton is an Associate Director in the Middle Tennessee State University Office of Financial Aid. She doubts few students will drop out even if the rate’s do rise.

“I think education is really important and it, overall, will help their earning potential. So yes, they’re going to bite-the-bullet and come even if the interest rate increases. However it will be even more of a challenge for them when they do get out.”

President Obama will address the issue today at the University of Iowa, where he’s expected to cast himself as the defender of cheaper student loans. He made similar appeals yesterday at universities in North Carolina and Colorado.