Interest rate for college loans doubles

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by Dave Cassidy, 13News

WVEC.com

Posted on July 1, 2013 at 6:48 AM

Updated Monday, Jul 1 at 5:47 PM

WASHINGTON, DC - The cost of college loans will double today for 7 million students and their families. 

Congress started their holiday break last Friday without doing anything about it, While they can fix it when they return to the hill, there's no guarantee they will.

Interest rates on "Stafford" loans rise from 3.4 percent to 6.8 percent. So, a student who borrows $27,000 to start college this fall will pay an extra $4,00 over the life of the loan.

Most Democrats want to continue the loans at the old, lower rate. Some Republicans want to tie them to the cost of government borrowing - making rates higher.

A year ago, during election season, the two parties extended the rates for another year.

Congress could make the change "retroactive" to July 1st so students won't pay more.

A month ago, 51 senators voted to keep the rates where they are, but they needed 60 votes to cut off debate and they fell short. A Republican plan fell short too.

Republicans say we need to raise the loan rate to reduce the federal deficit. They say doubling the rates would save a billion dollars. Democrats say we could save even more money by ending breaks for millionaires - and Republicans won't do that.

The one billion dollars in loan savings is dwarfed by the extra $46 billion senators voted last week to spend on border security.

 

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