Watch Out: Student Loan Rates are About to Double
While college costs continue to mount, the rate of federally subsidized student loans is on track to double by July 1. That’s if Congress doesn’t act in time. Will lawmakers do something about it and come up with a spending plan? Or will millions of millennials get royally screwed?
Nothing’s decided yet. But it appears that federally subsidized student loans will jump from 3.4 percent to 6.4 percent next month, according to The Atlantic.
The Senate last week killed a couple bills that would have stopped the rate hike. The Democratic solution would have locked in current rates for two years. The GOP counterpart would have matched rates with the government’s borrowing costs.
“Congress must act immediately to stop the imminent doubling of interest rates on student loans,” the White House said in a statement.
The doubled rates won’t affect existing borrowers. But the 7.6 million or so new loans anticipated in the coming year will have to pay more – about $39 more a month. That may seem like pocket change, but for some students that’s the difference between paying for a week’s worth of food and monthly electricity or not.
These Stafford loan borrowers aren’t typically rich either. The government doles them out based on financial need, taking into consideration tuition costs. Some are given to upper-middle-class pupils, but half of students depending on the loans come from families earning $50,000 a year or less, according to the Congressional Research Service.
Some student advocacy groups have come up with pretty helpful fact sheets and possible solutions for the issue, which you read here.
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