Student Loan Rates Double Without Congress' Action
"College students' interest rates are at the mercy of Congress. The interest rates on subsidized Stafford loans doubled from 3.4 percent Monday and could stay doubled unless Congress fulfills its pledge to restore lower rates when it returns from the Fourth of July holiday," the Associated Press reports. "Lawmakers from both parties, as well as the White House, vowed to lower that rate before students started signing loan documents this fall. But the rate now stands at 6.8 percent - higher than most loans available from private lenders. ... Efforts to keep interest rates from doubling on new subsidized Stafford loans fell apart last week amid partisan wrangling in the Senate. Democratic senators and the White House both predicted a deal would be reached in Congress to bring the rates down again before students return to campus. But if an agreement remains elusive, students could find themselves saddled with higher interest rates this year than last. Congress' Joint Economic Committee estimated the cost passed to students would be about $2,600. ... 'The only silver lining is that relatively few borrowers take out student loans in July and early August,' said Terry Hartle, a top official with colleges' lobbying operation at the American Council on Education. 'You really can't take out student loans more than 10 days before the term starts.' But that is little consolation for students looking at unexpected costs waiting for them on graduation day if Congress doesn't take action before it breaks again for the month of August. Students only borrow money for one school year at a time. Subsidized Stafford loans taken before Monday are not affected by the rate hike, nor are federal PLUS, Perkins or unsubsidized Stafford loans slated for the coming year. 'We're telling members to advise students that interest rates are going up,' said Justin Draeger, president of the National Association of Student Financial Aid Administrators."
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