Interest rates doubled for subsidized student loans

PARKVILLE, Mo. — Interest rates on federally subsidized student loans doubled overnight as Congress failed to pass a bill that would have held down costs for college students. Rates jumped from 3.4 percent to 6.8 percent. The increase is expected to cost the average college student an additional $2,600.

At Park University, students say it’s going to be harder to pay for their education. Democrats want to keep interest rates on so-called Stafford loans low. But Republicans would rather link the student loan rate to financial markets as a way of keeping Congress out of it. Democrats may vote on a one year extension of the low 3.4 percent rate on July 10. But for now, schools are telling students to plan on paying the higher 6.8 percent interest rate.

At Park University, this school alone has a portfolio of more than $40-million in government student loans.

Business major Royce Skocny is a veteran who’s using the GI bill to pay for most of his college education. Still, he expects to graduate with about $15,000 in federally subsidized student loans.

“Invest in 20 years from now not 20 days from now,” Skocny said. “I know that they think, raise the interest rates, it’s going to be a short term fix. But all it’s going to do is make us a less educated society overall. And that’s the opposite direction we need to think about heading.”

One-third of all undergraduate students are like Skocny, they rely on subsidized loans, which are awarded based on economic need. Taxpayers absorb a portion of the interest rate.

Outstanding student debt has become a national issue in recent years. Student loan debt is second only to mortgages as the largest debt consumers carry. In 2011, students on average owed nearly $27,000 in loans.

2 comments

  • Vickie Hudson

    I received my student loan in 1988 I was only 18 years of age at the time i attend bay town tech in dallas tx the amount of that loan was about 1000 dollars now I own 12289.48 im 43 years of age ,please help,,,,

  • rconkin

    When i first started school for paramedic training i had it completely set up for school to be paid full by the Full Employment Council. Then 12 monhs later the week after i had my last class i was told by FEC that they closed my case with only paying 1,124.00 and told my good luck on getting the rest of my school paid. This leaves me with over 2,500.00 in debt with school and i can graduate till my school is fully paid off. Oh did i mention they closed my case the day i turned off TANF because that was why they were helping me in the end for school. Im a single mom i only have 1 part time job as of right now. I have been calling around for student loans and everytime its either they no longer do student loans or i dont qualify for the student loan because i didnt go to a graduate school. I went to a technical school. Can someone please help me before this last year of schooling goes to a waste.

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