Students Take Hit Unless Congress Acts
"Unless Congress acts, the interest rate on new federally subsidized Stafford student loans taken out after June 30 will revert to 6.8 percent - the same rate charged on unsubsidized Stafford loans - from 3.4 percent," The San Francisco Chronicle reports. "[R]ather than extending it again or letting it expire, some financial aid experts want Congress to overhaul the rate-setting process for all government-guaranteed college loans. In a hearing Wednesday before the House Education and the Workforce Committee, several urged lawmakers to return to a market-based approach. ... About half of the students with subsidized loans also have unsubsidized loans at the higher rate, said Justin Draeger, chief executive of the National Association of Student Financial Aid Administrators. He says the current rate-setting structure is 'out of step' with market rates. 'Students and parents often question why federal student loan interest rates are higher than nearly all other installment loans, particularly for families with good credit. And the truth is, there is no good, reasonable answer to that question,' Draeger wrote in testimony prepared for Wednesday's hearing."
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