Interest Rates on Student Loans Set to Double on Monday
Student loan rates will double on Monday, July 1 from 3.4% to 6.8% since Congress and the President failed to come to an agreement on a way to lock in a lower rate.
The issue has been a heated debate but Republicans, Democrats and President Obama could not agree on a plan to keep the increase from happening. Lawmakers adjourned yesterday for the July 4 holiday, making the increase almost inevitable.
This increase will only affect new Stafford loans, not existing ones.
The pending rate hike could be reversed if Congress reaches an agreement in the future and makes the law retroactive.
A study released last month by Fidelity Investments found that 70% of the class of 2013 is graduating with college-related debt–averaging $35,200. The seven million students expected to take out new Stafford loans could have to pay a much bigger bill when they start paying the money back.