Local Students Upset Over College Loan Interest Rate Spike
PITTSBURGH (KDKA) - Congress is off on its Fourth of July holiday and did not resolve the interest rate crisis for student loans.
"Feel like it's not the first time that they've went on vacation when you know, there is something big they had to follow up on," Pitt graduate student Rachel Porterfield said.
Without Congressional action, interest rates on subsidized student loans jumped from 3.4 percent to 6.8 percent on July 1. However, the increase does not apply to existing loans. It only applies to new ones, which affects more than seven million borrowers.
Congress's failure to act will cost the average borrower around $2,600 in new interest payments and if you borrow the maximum amount and pay it back over 10 years after graduation, the added cost is about $4,000.
Students said that's tough in this economy of few jobs after graduation.
"Not having any way to pay those off within the next couple of years after you get out of college could create problems for us, could create problems for banks, and everyone in general," Ben Hatmaker said.
It could take a toll on the broader economy as well.
"People in their 20s are putting off home purchases, putting off automobile purchases, are not doing what their parents' generation did because they have so much debt," Sen. Jack Reed said.
Both Democrats and Republicans said they want a deal to help students, but they can't get their act together on this any more than they can on anything else.
Senate Democrats have scheduled a vote for July 10 to extend the lower rate for one more year, but there's no guarantee that House Republicans will go along.
Students said it's important for Congress to act.
"For some people, it doesn't matter, but for me and a lot of the friends I know, it's pretty astronomical. A couple thousand dollars makes a big difference in housing, in food, daily comforts," Joshua Won said.
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