President Obama helped to elevate the student loan interest rate debate to the national level.
July 1 wouldn't be the first time subsidized Stafford loans were doled out with a 6.8 percent interest rate. In fact, the current year marks the only time the rate has been at 3.4 percent, at least in recent history. Through the College Cost Reduction and Access Act of 2007, the interest rates on subsidized Stafford loans gradually decreased from 6.8 percent to 3.4 percent in 2011. Thus, the impending increase isn't coming as a surprise.
The timing, however, may not be ideal for students and their parents who need to borrow for college but were unaware of the impending interest rate uptick.
"Financial aid award letters have already been sent out. Students are sitting around the dinner table, having conversations about how to pay for school next year, and it is not helpful that your interest rates could double," notes Rich Williams, higher education advocate at the U.S. Public Interest Research Group. "There is a little bit of urgency to get [legislation passed] sooner rather than later."
Students and parents should stay tuned to what's going on in national politics, NASFAA's McClean recommends. Congress has until June 30 to act.
"This is probably going to be a last-minute compromise, if there is one," Kantrowitz surmises. "I wouldn't expect to see much movement on this until towards the end of June."
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