College students and their advocates are increasingly concerned about student loans, both those administered by the federal government and those made by private lenders.
On Tuesday, students rallied on Capitol Hill to protest a pending interest rate increase in subsidized loans made to low- and moderate-income undergraduates under the federal Stafford program. The rate is scheduled to increase to 6.8 percent from 3.4 percent for new loans made after June 30.
How can this be? A law called the College Cost Reduction and Access Act of 2007 reduced the interest rates on subsidized Stafford loans incrementally over four academic years, from 6.8 percent at the time to the current 3.4 percent. But the rates are scheduled to jump back up on July 1, unless Congress acts to extend the current rate — a tall order, in the charged election year political climate. (Representative Joe Courtney, Democrat of Connecticut, has introduced a bill to extend the lower rate.)
Student advocates have been worried about the level of student debt. And they warn that the Stafford increase will further burden borrowers by adding thousands of dollars to the cost of financing a college degree. Rich Williams, higher education advocate with the U.S. Public Interest Research Group, said nearly 8 million students take out the loans each year.