According to a recent study by the Pew Center on the States, Americans believe access to a quality education is the most important way the government can help people get ahead. Next year, reaching that goal could become more difficult. With the federal student loan interest rate set to double to 6.8 percent, college could become much more expensive for millions of students. Both parties in Congress have said they want to keep the lower rate, but they are far apart on how to find the $6 billion annually to pay for the loan subsidies.

The federal government has a long history of helping people pay for higher education. After World War II, the GI Bill allowed millions of veterans to attend college with federal support for college tuition and living expenses. In 1965, the Federal Guaranteed Student Loan program was created as one of the Great Society programs. The program provided direct loans to millions of would-be college students; some were subsidized, some were not, depending on income and eligibility requirements. However, because all of the loans were directly financed by the federal government, individuals could receive a much lower interest rate than they would have through private banks. In 1988, the program was renamed the Stafford Loan program. Today, Stafford Loans and Pell Grants, which provide direct assistance to low- and moderate-income students, continue to help millions of young people afford college.

In many advanced industrial countries, higher education is fully paid for or heavily subsidized by the national government. By contrast, U.S. government support is mostly indirect in the form of grants and loans. This system has helped a growing share of the population to attend college: the number of people with college degrees has grown by almost sevenfold since 1940.

A college education is generally considered a necessary but not sufficient entry ticket to the middle class. Those with a bachelor's degree earn roughly twice as much as those with just a high school diploma, and the unemployment rate of college graduates is half that of those with only a high school education (as of 2010).

However, the cost of college is exploding. Public four-year colleges are almost four times as expensive as they were thirty years ago (after adjusting for inflation). The escalating cost of college has resulted in a huge increase in student borrowing. Today, 34 percent of undergraduates – nine million students – have Stafford Loans, and the average annual loan amount exceeds $6,700. The average college student graduates with $25,000 in student loan debt today, a 25 percent increase from ten years ago. Total student loan debt just topped $1 trillion, more than the entire nation owes in credit card debt.

In 2007, a Democratic-controlled Congress cut government subsidies to private loan providers, saving the government $20 billion. The law incrementally reduced student loan interest rates and increased funding for direct aid to low-income students (the Pell Grant program) in an attempt to lessen the debt burden on American students. The bill largely succeeded. In 2008, private loans, which typically have higher interest rates than federal loans, represented about 25 percent of new loans; in 2011, this figure had dropped to just seven percent.

Returning to higher rates for federal loans would cost a typical college student more than $1,000 per year of schooling, a 17 percent increase in costs. The rate increase is set to kick in on July 1 as specified by the 2007 law.

Now that the issue has become a political football, all parties agree that the rate on Stafford Loans should be kept at 3.4 percent. The debate has moved to how to pay for the $6 billion a year the program costs (over time, student loans actually generate a net profit for the government).

Democrats in the House and Senate have different ideas for how to pay for the extension. In the House, Democrats want to cut oil and gas subsidies to pay for the loan program. These subsidies cost the government billions of dollars a year; ending the subsidies would represent a subsidy transfer from profitable corporations to low-income students. In the Senate, Democrats are proposing to raise taxes on certain "S-corporations" (a type of corporation whose shareholders, rather than the corporation itself, typically pay federal income taxes) and ensure they pay their fair share. According to a 2009 report by the Government Accountability Office, S-corporations underreported wages by almost $24 billion, which may have resulted in "billions in annual employment tax underpayments."

In late April, House Republicans passed an extension of the current interest rate levels, but in exchange for the lower rates voted to permanently eliminate a program called the Prevention and Public Health Fund (Prevention Fund). Worth about a billion dollars a year, the Prevention Fund supports two main investments that help provide health care services, typically to low-income areas, according to The Washington Post. The Prevention Fund has spent about $200 million on training new primary care doctors. (The nation is projected to be short about 30,000 primary care doctors over the next three years.) It also provides funding for anti-cancer screenings (particularly for women) and "health intervention" initiatives, such as smoking cessation and food access programs. Savings over multiple years from elimination of the fund would pay for a one-year extension of the low interest rates, a calculation built into the House extension bill.

The nation is slowly recovering from the recession, but many young people leaving school are still struggling to find a foothold in the economy. Allowing their student loan rates to double will make it even harder for them to make ends meet and have enough financial resources to pay for everyday needs such as transportation and housing. Continuing to subsidize the student loan program by asking profitable corporations to pay more will not depress demand. Insisting that the program be financed with cuts in other areas could. Austerity budgets aren’t working in Europe, and they won’t help rev the engine of the U.S. economy: consumer spending.

Each time choices like this come to the fore in the coming months, the American people need to ask: Who benefits when a program or subsidy is extended? Who suffers when a program disappears? All fiscal choices have consequences.

Editor's note: This article has been updated since its original publication date to clarify the information about the Prevention and Public Health Fund.