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Favourable interest rates for students have been extended and this deficit would be paid for by the federal pension insurance premiums. The student loan crisis has finally been resolved by the US Congress last week after months of haggling.

More than seven million students will benefit by the last minute bill passed by the Congress containing the student loan at the present rate of 3.4 per cent. President Obama’s signature is pending on the legislation that has been referred to the White House.

A lot of hard work has gone into extending the low interest rates by our President as a part of his campaign. He has visited a lot of universities and colleges and given many a speech on this issue.

The only deadlock was on ways to bridge the $6 billion gap that would be created by not increasing the student loans as both parties did not want an increase in the loan rates. Federal pension insurance premiums will now pay for the same. For another five years, federal flood insurance program has also been shored up by the bill.

Just before the July 1st deadline, an announcement was made by Congressional leaders that they have successfully prevented the doubling of student loan rates by bringing in other measures.
There is no doubt this measure is great for American students currently saddled with massive loan debts. For our President however, this issue had been a focal point of his election campaign and he has to fill up the gap with other ambiguous issues.

One of the major factors that helped him succeed in the 2008 coalition is the youth vote. Youth vote is always found to be unreliable. Informal survey shows that our youngsters are not as excited by the upcoming election as they were in 2008. This is a dispiriting conclusion from the segment of voters between 18 and 24 who have suffered a lot during the recent recession. Their scepticism on the intervention of government to solve the crisis is evident.

Our President has been campaigning vociferously on the student loan issue. He has given many a speech to excite the youth vote painting a picture of the Congress as dysfunctional as compared to his role as a defender of American youth.

He obviously will not be able to use this issue as a part of his rally any longer as the deal is finally stuck. There is however an avenue he could focus on. Certain unpopular concessions are used to balance the loans in this deal. These concessions may be detrimental to students in the long run.

Following graduation, during the first six months, students were previously given a grace period to start their loan repayment. Now, they have to start paying their debts immediately after their graduation. As compared to before where the government offered subsidized interest rates while students were enrolled, now the interest rates will apply even while they are in school.

By the end of this ordeal, though President Obama has won a policy victory, it remains to be seen to what extent he is on the winning side if you consider this a political issue.