Interest rates on federally subsidized student loans are set to double to 6.8% on July 1st. Seven million students will be affected by the increase. The Republican-controlled congress passed a bill that would stop the rates from doubling for now, but would allow them to rise later. President Obama has vowed to veto the bill.
The rate hike will affect a third of all undergraduate students who have subsidized student loans- where the government absorbs some of the interest rate.
For York County mom, Amy Debolt, she’s concerned.
“I am worried about sending them to college and how much it will cost to send them,” says Debolt.
Debolt fears for student loans coming from Uncle Sam.
While Congress and The White House may agree something should be done to keep college loans affordable, a longer term solution is yet to be determined.
York College financial assistant, Ed Lane, says Congress is trying to avert the doubling of interest rates to 6.8% to mirror unsubsidized rates. But if the proposal doesn’t pass, it could mean tougher financial planning for you.
Lane says, “If it’s going to adjust every year those rates when they take a loan next year, when you’re looking four years out to repayment, that can make a huge difference.”
Lane says students entering college will notice a change immediately.
“So if it starts at 4.4% next year, that will go from 4.4 to 5.4 in a year,” says Lane.
For young families like the Debolts, the surge won’t hurt the daughters’ education.
Debolt says, “I still think it’s a worthwhile investment to have the college education if you can’t afford to pay for it outright.”