Photo Credit: Bark
Interest rates on federal student loans will double unless Congress takes action by this summer to keep the low rates in place.
Currently federal student loans pay 3.4% interest but that rate is set to expire this summer. So unless Congress takes action to keep the rates low they will revert back to the old rate of 6.8%.
The big question now is if Congress will actually pass legislation that will hold the interest rate where it is currently considering that the low rate costs the U.S. government about $5.6 billion a year. In light of a budget conscious and deficit reducing Congress it is entirely plausible that the subsidy for the low rate federal student loans will be left to expire.
In recent sessions Congress has cut out subsidized loans for graduate students and $8 billion from the Pell Grant program. Under those changes graduate student would have to either start repaying their loans while in school or let interest start to build until after they graduate.
These changes going into effect July 1, 2012 will only make the cost of an unaffordable education even more unaffordable.
So what do you think, should Congress act to keep federal student loan rates at their current rate or let them double to help bring down the national deficit?