“It’s Official: Student Loan Rates Will Double Monday”

ABC NEWS

By Shelby Bremer, Credit.com

Senate Health, Education, Labor and Pension Committee Chairman Sen. Tom Harkin, D-Iowa, discusses a graph and legislation to try and prevent the increase in the interest rates on some student loans during a news conference on Capitol Hill in Washington, June 27, 2013. (Susan Walsh/AP Photo)

Senate Health, Education, Labor and Pension Committee Chairman Sen. Tom Harkin, D-Iowa, discusses a graph and legislation to try and prevent the increase in the interest rates on some student loans during a news conference on Capitol Hill in Washington, June 27, 2013. (Susan Walsh/AP Photo)

More than 7 million students will see interest rates on their student loans double from 3.4 to 6.8 percent on Monday, after the failure of Congress to pass legislation to prevent the automatic rate hike that they successfully deferred for a year last summer.

Despite the introduction of several bills to serve as a solution, lawmakers will leave for the week-long July 4 recess without implementing any of them, letting the July 1 deadline pass. Any students taking or renewing federal subsidized Stafford loans after that deadline can expect to pay, for example, an additional $3,000 on a $23,000 loan paid off over 10 years.

House Republicans passed the Smarter Solutions for Students Act on May 23, a measure that ties student loan interest rates to market-based rates. This plan would have reset student loan rates every year depending on the rate on U.S. Treasuries, which Senate Democrats claimed was too uncertain and with a cap of 8.5 percent, could push rates even higher than 6.8 percent.

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