If new legislation is not passed, this July the interest rate for Federal Direct Stafford Loans for 7.4 million students will rise from 3.4 to 6.8 percent.
Doubling the college loan interest rate places a greater burden on the shoulders of students already struggling to carry debt at existing loan rates. It is difficult enough as it is to find a job post-grad to pay off these loans, while at the same time there are few other financial aid options. This is unacceptable in a country that prides itself in having such an educated population.
Mark Kantrowitz, publisher of Finaid.com, told The San Francisco Chronicle that if a student took out $9,000 of unsubsidized loans over four years at 6.8 percent instead of 3.4 percent, it would cost an additional $1,800 over 10 years. It would cost an extra $4,075 over a 20-year repayment period.
Though it is true that these rates are lower than getting loans from a bank, the government should not be making students pay more. As the future contributors to the economy, students should not have to be in debt longer.
It is very likely that there will be some sort of bill passed to keep the rates at 3.4 percent since it would be inconvenient for a hike to come with elections coming up this November.
There are Republican and Democrat versions of a bill to keep the interest rate at 3.4 percent for at least a year. The Senate is voting today on whether to start debating the Democratic plan. Though each measure uses different means to finance the around $6 million funds needed to cover keeping the interest rates at the lower percentage, they both would keep the rate the same. It is vital that Congress makes a bipartisan effort to ensure that students can afford to pay off loans.
