Student Loan Interest Rates Set to Double on July 1st – Do You Care?

According to the President, if Congress doesn’t act soon, the interest rates on student loans will double on July 1st. This is the equivalent of another $1,000 per year of interest. Personally, this doesn’t affect me. Thanks to the GI Bill, I never had student loans and I saved enough to pay my childrens’ tuition, but…

Are there any GovLoopers with Student Loans? What do you think? Do you care?

(For details, go to http://www.whitehouse.gov/blog/2012/04/24/president-obama-asks-students-tell-congress-dontdoublemyrate.)

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Corey McCarren

I can’t imagine how any politicians think this is acceptable with higher-education costs skyrocketing. This could spell out bad news for me if I decide to go back to school to pursue a Masters.

Terrence (Terry) Hill

@Curt – It is a federally subsidized rate.

It will cost the United States $6 billion to extend the student loans for just one year, according to the Congressional Budget Office. The argument against extending the subsidized rates is that they are not sustainable.

Only undergraduate loans will go from 3.4 to 6.8 percent. Graduate loans stay at 6.8 percent. Don’t ask me why mortgage loans are at an all-time low, while college loan rates are doubling.

Julie Chase

Currently my husband and I are paying back our son’s student loan, due to lack of jobs and the current hiring freeze at our installation which I hope breaks soon. Although, BRAC is coming (cue Darth Vader death march music)….so not sure what the kid is going to do.

Terrence (Terry) Hill

@Julie – I feel for you! Talk about a double whammy! The next looming crisis will be defaults on student loans. Even if graduates can find jobs, they often don’t pay enough to both live independently and pay student loans. Something has to give. In your case, your son is lucky to have great parents!

Julie Chase

Terry, yes, it is double whammy as my DH and I have boomerang kids. The other one works 2 part jobs and both are living back home. The rents out there for a decent place start at $700.00 and that doesn’t include utilities. I don’t know how the young people do it. Actually, if it wasn’t for the miltary installation here, this area would be a ghost town. That is why BRAC is so scary. We have been through one. I am thankful my DH is retired from CS (CSRS). I have many years to go. Someone here on GovLoop suggested an non paid internship. Yeah, ok, and my kid will live in a cardboard box? Sorry, we aren’t the Gates family. The hiring freeze is alive and well here and everyone (truth be told) is afraid of the BRAC and the draw down is also in play.

Scott Kearby

It’s my understanding that in 2007 the Congress lowered the interest rate from 6.8% to 3.4% but included the provision that it would return to 6.8% on July 1, 2012.

Why it wasn’t made permanent at the time & why they picked this date for the increase/return to previous rate & how they propose to pay for it (or more likely not pay for it) … it smacks of politics, typical half-ass work from legislative branch putting off hard decisions & hard choices.