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Student loan interest rate could skyrocket this summer

5:46 PM, May 23, 2013   |    comments
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Uncle Sam could put student loans in the hands of Wall Street. On Thursday, the U.S. House passed a bill that would tie interest rates to treasury bills.

That bill still has to get through the Senate. But even as Congress grapples over this legislation, student loan interest rates are set to double on July 1st to 6.8 percent.

That means thousands of Northeast Ohio graduates will be digging deeper into their pockets to pay off loans.

Tara Killmer graduated from Cleveland State University two weeks ago with a degree in International Relations. She already has her first job lined up.

She doesn't know what her paycheck will look like, but has a good idea about how much she'll be paying in student loans.

"I'll have $63,000 when I'm done, well, when I consolidate it all," says Killmer.

The average student borrows $23,000 in subsidized student loans. A higher rate could mean tens of thousands of dollars in interest over the course of 10 to 30 years.

"It means they're less likely to buy a car, less likely to buy a house, less likely to start a business, and that ripple effect all across Northeast Ohio has a dampening effect on our economy," says U.S. Sen. Sherrod Brown.

Brown is introducing his own legislation, asking the government to freeze the interest rate for subsidized loans at 3.4 percent. He says Congress was able to stop the rate from going up a year ago and he doesn't see why they can't do it again.

WKYC-TV

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