WASHINGTON - Interest rates on some new federally backed loans for college students are now double what they were last week, because Congress didn't strike a deal to keep them low.
Subsidized Stafford loan interest rates doubled to 6.8 percent on Monday which translates to an extra $2,600 per student in costs. It affects roughly a quarter of all federal borrowers, and is expected to affect more than 7 million students for the upcoming 2013 to 2014 school year.
Congressman Paul Tonko and school officials joined concerned educators, parents and college students Monday at the University at Albany calling on Congress to pass legislation that would maintain lowered rates.
"During tough economic times, we must foster an environment for college graduates that gives them the best possible chance at success," Tonko said. "Congress must work out a long-term plan that will provide our future leaders with opportunity as they begin the next stage in their lives."
Kevin Fox, a senior at UAlbany, shared his story with Tonko and others, explaining the financial challenges of getting his college degree. "I don't think I have a friend who doesn't work a part time job as well as try to go to school as a full time student."
Lynelle Engelmyer, a former financial aid director says she knows all too well how tough it may be for students to afford higher education. She says with the new interest rates doubling, students won't feel the affect until they have to repay their loans after they graduate.
"A student taking out a loan won't notice the difference unless they read the fine print. So it may be an unfortunate shocker when they repay their loan and find out what was a 3.4 percent yesterday is a 6.8 percent today," said Engelmyer.
Tonko is a cosponsor of the Student Loan Relief Act of 2013, which would freeze federal student loan rates at the current low of 3.4 percent for two years while Congress works out a long-term solution.
Lawmakers say they can return the interest rates to 3.4 percent when they return after the July 4th holiday.
The Republican-led House passed a bill before leaving town that linked student loan interest rates to the financial markets. The Democratic-led Senate, however, was unable to overcome a procedural hurdle.
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