Students nationwide, along with some federal lawmakers, are working hard to ensure that school loan interest rates don’t double this summer — something which may hamper many college-aged consumers in the short and long run.
July 1 is the date on which some government student loan types — new subsidized Stafford loans – will see interest rates jump, should legislators fail to act and implement new measures to avoid such a marked hike. Millions of students nationwide rely on these student loans to pay for school. Thus, with a rate rise, graduates will leave school with substantial amounts of debt and possibly lower credit scores, which may further hinder household finances.
The doubling of rates on these Stafford loans would bring them from 3.4 percent to 6.8 percent. This equals roughly $6 billion in interest.
While student advocates across the country are vocal in their opposition to this increase, some lawmakers are coming to their aid. For instance, Connecticut Rep. Joe Courtney has been outspoken against the plans for rate increases, and spoke with the Obama administration regarding the negative effects such a decision could have on students and the economy at large.
However, Courtney noted the fact the White House is open to talking about this issue means some kind of resolution to eradicate rate hikes is possible.
“They don’t talk to me about a lot of other issues, so the fact that they took the time to meet and check in shows that they are very mindful that this is a huge issue,” Courtney told The Hill. ”I do think you’re going to see this now become a White House position that is going to become more public.”
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Though it seems members of Congress may be able to eliminate this rate increase, one expert thinks that the fact this jump is occurring in a non-election year may lead to it going through as planned. FinAid.org publisher Mark Kantrowitz told Fox Business that due to a lack of public policy interest on this matter for some lawmakers nationwide, the doubling of rates could end up happening.
Some lawmakers believe President Obama’s new budget plan may come with an extended deadline for these rates to go up.
Image: rpongsaj, via Flickr