Politics & Government

Student Loan Rates Double Nationwide

After failure to meet a July 1 deadline, Congress left for recess with Stafford loan rates set to double on Monday.

By Katherine Hafner

Student loan rates for colleges across the nation doubled Monday, after Congress failed to meet the July 1 deadline to prevent the hike.

The rate, currently at 3.4 percent, was extended for a year last summer, when Congress reached a last-minute compromise two days before the July 1 deadline.

But this time around, amid partisan bickering, Congress has left for its July 4 recess without reaching an agreement on the topic.

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The Stafford loan rates – which are federally subsidized loans that account for about a quarter of all direct federal borrowing – as of Monday have doubled to a 6.8 percent interest rate.

The Congress Joint Economic Committee estimates this to cost about $2,600 per student using the loans, according to the Associated Press.

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The doubled rate only applies to students who take out new loans.

Although this does not immediately affect students who are on summer vacation and have not yet taken out loans for their fall term, it does impact those who need federal aid for their summer classes.

Legislative back-and-forth has plagued the discussion of student loans, an issue at the forefront of President Barack Obama’s agenda this year.

During the 2012 presidential race, both Democrats and Republicans pledged to extend the 3.4 percent interest rates for another year, according to the Associated Press.

Obama has proposed a method of tying student loan rates to the financial market, which was rejected because of a lack of assurance rates would not rise dramatically given economic success in the market.

Other attempts at reform have also failed in Congress, either being shot down in the Republican-controlled House or the Democratic-controlled Senate.

When lawmakers return from recess the loan rates could still be retroactively lowered, which many have pledged to do.

But if Congressional inaction persists come the end of summer, students who need to take out federal loans will be saddled with two times the interest upon leaving college.

Tell us, in the comments section below:

-What do you think about student loan rates doubling?

-Will you or someone you know be affected by this change to federal aid?

-Do you think legislators will reach an agreement when they return from July 4 vacation?


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