Student loan rate set to double unless Congress acts

5:39 PM, Jun 20, 2013   |    comments
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A deadline looms large for college students across the country.

Congress has until July 1 to end their standoff over government-subsidized student loan rates.

If no agreement is reached, interest rates on these loans will double.

"It would be catastrophic to me," says Kent State University senior Shanisha Collins.

Collins is one of the 7 million students who relies on a Stafford Loan from the federal government to help her pay for college.

The possible rate increase weighs heavily on her.

"It would be hard for me to try and pay it back," she says.

Unless Congress acts by July 1, the interest rate on subsidized federal direct loans will increase from 3.4 percent to 6.8 percent, affecting students who are either starting or continuing their education this fall.

"We were in this position a year ago, and at the eleventh hour, Congress did act to postpone it another year," says Mark Evans, director of financial aid at Kent State University.

So far, Congress has been unable to agree on a plan. Legislation that passed in the House last month failed in the Senate.

Inaction has costly consequences for students.

The rate increase means that 7 million borrowers would owe $1,000 more for each of year college over the life of the loan.

Students like Shanisha Collins are hopeful a resolution will be reached.

"It's going to have an impact on us now and our future generations trying to go to college," she says.

WKYC-TV

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