The interest rate on government-subsidized Stafford loans is set to double on July 1 – to 6.8 percent from 3.4 percent – unless Congress acts to stop it. And there’s no guarantee it will.
Christian Walker, an economics and political science major at Northern Arizona University, needs Stafford loans to stay in school next year. He already expects to graduate with $50,000 in debt. “Raising the interest rate on those loans just compounds the problem and increases the amount of money I’ll have to pay back after I graduate,” he said.
It’s truly déjà vu for families who rely on Stafford loans to help pay for college. The interest rate hike was going to take effect last year, but faced with a nationwide backlash, Congress agreed to delay the increase for one year. So here we are again.
Student groups and college educators across the country have called on Congress to stop the rate hike, which would affect more than 7 million students. The consumer advocacy group U.S. PIRG estimates that doubling the interest rate on Stafford loans would add another $1,000 to the cost of each loan – and many students need one loan for each year of school.
“The argument against it is the same as it was last year: The interest rate is way too high,” said Ethan Senack, U.S. PIRG’s higher education associate. “At a time when students and their families are already facing massive debt, this is a cost increase they simply cannot afford.”