Student Loan Rates Double As Congress Fails To Reach A Deal
The interest rates for federally subsidized Stafford student loans increases today from 3.4 percent to 6.8 percent after Congress failed to reach a deal to maintain current rates. Democrats have said that they want to keep the interest rate low to help low- and middle-income students. Republicans have pushed to make the interest rates meet the 10-year Treasury notes. According to Fox News, Democrats have said that the Senate will consider voting on a yearlong extension on July 10, following the July 4 holiday. House Republicans say they would prefer a long-term solution. The National Association of Student Financial Aid Administrators tells CNNMoney that they’re telling students to settle into this higher rate.
The new rates only apply to new loans. But any deal could be retroactive. There’s hope that a compromise will be reached before the end of the summer when the number of loans jumps up with the beginning of the school year.
Young people, more than ever, are saddled with high amounts of student loan debt and few employment options. CNNMoney notes that it’s the second largest debt adults carry these days behind their mortgage. As of 2011, the average student loan debt was $27,000. For many people, the debt has become a hindrance, stopping consumers from purchasing houses, buying a car, or starting a family because they can’t afford it. Experts who spoke with USA Today said that the key is to graduate with a manageable amount of debt, a figure that doesn’t exceed the first year’s annual income. Others said the shifts that could occur because of the heavy debt load could have dramatic social implications.