(CBS News) Congress has failed to hash out a solution on student loan borrowing, and that means starting Monday, interest rates on government-funded student loans will double from 3.4 percent to 6.8 percent. The jump will affect the seven million people who will take out a loan this year, but will not impact people who already have loans.
The jump is as a result of Congress' inability to agree on a methodology on student loan interest, CBS News contributor and analyst Mellody Hobson explained on "CBS This Morning." She said, "They could come up with some kind of solution that would be retroactive to today, and so, it's not over yet, but the bottom line is there's a big dispute. The Democrats say, 'Let's delay this for one year, keep rates the way they are.' The Republicans say, 'Let's not have rates jump and be out of control, but let's come up with some method that ties the rates to real interest rates.'"
But whatever the decision, the jump in interest and student loan debt, as a whole, has a potential effect on the larger economy -- and the signs are already surfacing, particularly with spending. "(The debt) is causing people to delay starting families, buying cars, buying homes."
Years ago, Hobson noted, the more education you had, the more likely you were to own a home. Now, because of the debt, the more education you have, people are less likely to own a home -- 36 percent less likely if you have student debt.
"Just buying a house and starting a family has $145,000 in economic activity tied to it," Hobson said. "And so not doing that, could slow down the economy."
Watch Mellody Hobson's full analysis in the video above.