Student Loan Law May Raise Interest Rates
In August, Congress made a plan to change federal student loan interest rates from fixed to market based. The worse the economy, the lower the interest rate would be.
This may seem like a good idea at first, especially since it will lower the interest rate from 6.8% to 5.4% right now. However, that benefit will not last forever. Some analysts say that it could raise the interest to the cap of 9.5% as the economy improves.
That 9.5% cap does not apply to all students. Undergrads have a cap of 8.25%.
This is upsetting to the graduate students that have a student loan. They feel they should not be charged any more than their baccalaureate-pursuing counterparts.
“There has been a large focus on undergraduate education–which we support–but it definitely feels like there has been a marginalizing of graduate students in terms of student loans,” said Meredith Niles, director of legislative affairs at the National Association of Graduate-Professional Students. “Over the long term, it’s going to be a disaster.”
According to the College Board, graduate students accounted for 67% of the aid distributed to college students throughout the 2011-2012 school year. Thus, by potentially charging grads more interest than undergrads, the government stands to make a lot of extra money.
Graduate students want to have a 6.8% interest rate cap, and they want to bring back the subsidized loan program that allows them to start repayments after graduation.