U.S. Congress Considering Student Loan Interest Rate Increase
Federal student loan interest rates on subsidized* (see below) loans are set to rise from 3.4% to 6.8% on July 1, 2013. (Note: the interest rate for unsubsidized Federal student loans, in which interest begins accruing from the date of the loan, is currently 6.8%.) In other words, on the maximum amount of of Federal unsubsidized loans for a year, or $3500, the increased interest rate would equal $564 more in interest payments over the life of the loan. As total student debt in the United States grows past the $1 Trillion mark, and in 2012, a third of young adults 18-34 are living at home with their parents according to the U.S. Census Bureau, the consequences of a student loan interest rate hike can affect not only current college students being able to afford college expenses, but also have long term economic effects for the nation, as we discussed in an April post. Current and prospective college students and their families would be prudent to include an interest rate increase in their plans to save and pay for college.
*Subsidized loans do not accrue any interest while the student is enrolled in college.