Congressional leaders were working Wednesday to negotiate agreements on two major policy issues that will impact how much thousands of Maine students pay for college loans as well as state officials’ ability to develop longer-term highway and transportation plans.

Unless Congress acts by Saturday, the interest rate on new, federal-backed student loans will double from 3.4 percent to 6.8 percent on July 1. The result would be nearly $1,000 in additional costs over the life of the loan for an estimated 35,000 college students in Maine and millions of students nationwide.

There is broad, bipartisan support on Capitol Hill to freeze the interest rate at 3.4 percent for at least one more year, and Senate leaders from both parties have said they reached agreement on a way to cover the estimated $6 billion price tag. But the fate of the issue appears tied to separate wrangling over a bill to provide federal funding for transportation projects.

With most of the negotiations happening between party leaders behind closed doors, other lawmakers are in a wait-and-see mode as Congress attempts to wrap up its work prior to the week-long break.

“They were voting at 11 o’clock last night,” said Willy Ritch, spokesman for U.S. Rep. Chellie Pingree. “There is a big push to get things done before the Fourth of July break.”

Maine’s congressional delegation has supported maintaining the lower student loan interest rate and enacting the first, multi-year highway budget in several years. Sen. Olympia Snowe, a Republican, has consistently voted “present” on the student loan issue, however, because her husband, former Maine Gov. John McKernan, works in the for-profit higher education industry.

The action — or inaction — on the student loan interest rates comes at a time of growing debate in Maine and nationally over college students’ debt load.

Maine college students at four-year institutions graduated with the second-highest debt burden in the nation in 2010, averaging $29,983 per student. Public college students in Maine, meanwhile, graduated with the heaviest debt load in the country that year, according to a recent report from the Institute for College Access and Success.

Rob Brown, director of the grassroots organization Opportunity Maine that is involved in education issues, said Maine has more first-generation college students than other states. And while some private colleges in the state have sizable financial aid programs, others relatively expensive colleges are not offering adequate financial assistance, Brown said.

Brown said he doesn’t place much stock in the supposed agreement on interest rates until the Republican-controlled House votes.

“The other thing about this that is frustrating is how narrow the debate is,” Brown said. “The attitude you get out of Washington is keeping the interest rate at 3.4 percent is the end-all be-all and if they deal with that, everybody will be fine.”

Gianna Marrs, interim director of student financial aid at the University of Maine, in Orono, said her office has been advising students about the potential rate increase and posted several links on the office’s website. As for the wider debate over student debt, Marrs said her staff are trying to ensure students fully understand their financing options and borrow only what they absolutely need.

“We tell students that what you borrow now is going to affect your salary” after graduation, Marrs said.

As of Wednesday afternoon, congressional leaders seemed intent on attaching the interest rate fix onto a federal transportation bill that will keep federal funding flowing for highway projects. The last federal surface transportation project authorization bill expired 20 years ago, and Congress has been authorizing temporary extensions ever since.

Ted Talbot, spokesman for the Maine Department of Transportation, said the continual uncertainty affects that state’s ability to make long-term plans which, in turn, impacts the businesses that perform the work.

“We would like to be able to tell our contractors that we have some long-term plans and that they can count on it,” Talbot said.

Talbot said it is too early to say which Maine projects would be affected if Congress fails to authorize a new budget versus another temporary extension. But he said the highest-priority projects — such as bridge repairs due to safety concerns — would still take place as scheduled. But a road reconstruction may, instead, turn into several years of surface improvements if the federal funding isn’t there.

“It might be that those lower on the list will take longer to address,” he said.


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.

Kennebec Journal & Morning Sentinel news

Get news and events from your towns in your inbox every Friday.
  • This field is for validation purposes and should be left unchanged.