York, PA – Millions of Americans are bracing to pay more for their college loans if Congress doesn’t act. The interest rate of the federal Stafford loans is set to double come July 1.
Imagine having to ante up another $2,800 to $5,000 to repay some of your loans. That’s the predicament for some seven million Americans, including 350,000 Pennsylvanians, who have the federally subsidized Stafford loans. The rate will double on July 1 if Congress doesn’t take action. It’s a cost that some say is just too tough to bear.
The cost of college is growing by leaps and bounds and if Congress doesn’t act, it’s going to get more expensive.
“I had to take out $40,000,” said student Ebony Jackson.
Ebony Jackson is drowning in debt. Her degrees cost her over $60,000. She’s in the process of paying that back but come July 1, the current interest rate will go up meaning she is going to be paying more.
“I went from $15,000 to over $60,000 very quickly,” Jackson said.
Over seven million Americans have borrowed from the federally subsidized Stafford Loan program. If Congress doesn’t extend the current rates, that rate will double from 3.4 to 6.8 percent which would cost the average borrower $2,800 more over the course of the loan.
“This is an issue of fairness,” said Senator Jack Reed, (D) Rhode Island.
If that same student borrows the maximum amount of $23,000, an interest increase would cost the student about $5,000 more over a ten year period.
“Students and families simply can’t absorb these costs in this tough economy in the face of rising tuition and dwindling state support of higher education,” said Senator Reed.
Democrats and Republicans each authored fixes but both plans died in the Senate. Whatever the resolution, people say something has to be done or people are going to suffer.
“We definitely have to stay on top of it,” Jackson said.
The Democrats idea to fix the scenario would keep the 3.4 percent interest rate in place for the next two years. That measure died in the Senate last week. Republicans are looking to tie the interest rate to a variable rate set by the U.S. Treasury. That idea died in the Senate as well.