Student Loan Rates Set To Double Monday
by Jill Johnson
June 28, 2013 6:26 PM
If Congress doesn't act fast, on Monday, interest rates on some federal student loans are set to double. The increase would have an effect on as many as 7 million college students.
The 37 million Americans who are still paying off existing loans would not be affected. It's those students who plan to take out a loan or renew loans after July 1st, who may have to pay the price.
Michelle Swenson of Sioux City, Neb. says attending the University of Sioux Falls has become a family tradition. Her sister Stephanie just graduated from USF and her other sister Casandra is going to be junior. As for Michelle, she will start classes at the University this fall.
Michelle said, "I just signed up for classes today (Friday)."
She did it just in time.
Michelle said, "There's three different loans that I got, like the Stafford and the Perkins loans, so those I will have to start paying those off a year after I finish college."
Interest rates on federal subsidized Stafford loans are set to double from 3.4 to 6.8 percent. A rate that would have cost Michelle a great deal of money.
Michelle said, "We're not talking hundreds, it's thousands of dollars you have to pay."
It's all because of a standoff on Capitol Hill. The Republican controlled House has passed student loan legislation in May. The plan calls for lower rates, but adjustable rates, that would fluctuate with the market.
Republican Rep. Eric Cantor of Virginia said, "Students of this country have a right to quality education and they shouldn't be burdened by ever spiraling interest rates on their student loan."
The democrats, who control the Senate, say the plan is worse than doing nothing at all. They say at least the 6.8 percent would be a fixed rate.
Democratic Representative Joe Courtney of Connecticut said, "... a bill that will put kids into a variable rate system that we know over time will be higher than 6.8 percent."
Regardless of the rates, and the rising cost of going to college, Michelle says she's determined to follow in her sister's foot steps.
"It's expensive, you have to be committed," said Michelle.
As of Friday, there were not enough votes on either side in the Senate.
Congress can still pass legislation stopping the increase after the July 1 deadline. Until then, it's creating a lot of uncertainty for borrowers.