North Texas Daily

Interest rates on student loans could double soon

Interest rates on student loans could double soon

April 10
21:39 2013

Joshua Knopp / Staff Writer

Without action from Congress, interest rates for subsidized student loans could double this July, according to the Huffington Post.

A relief act signed in 2007 brought the interest rates down from 6.8 percent to 3.4 percent. This law is expiring, and if it does, loans that are made after July 1 will be higher than the year before.

The law does nothing to change unsubsidized loan rates, which have stayed constant at 6.8 percent since the 2008-09 school year, according to finaid.org.

According to insidehighered.com, Congress had a hearing on the topic early in March. Congress had already passed a one-year extension of the original 2005 bill last year.

Two political science professors see the issue differently.

Philip Paolino thinks that because many students fall in the middle class category, Congress will have to extend the lowered interest rates because it will help most people.

“That would be one area that I think Congress would have a strong interest to keep the 3.4 percent interest rates,” he said. “It’s going to be something where all members of Congress will be facing pressure.”

Kimi Lynn King, on the other hand, stressed the importance of students making their voice heard, and didn’t think Congress would act if there wasn’t pressure from student organizations.

“It will really depend on whether people will gather and push this issue,” she said.

According to the insidehighered.com article, student groups were part of the one-year extension that is already in effect.

Student debt is also an issue in the U.S.

According to collegestats.org, 11 percent of student debt has been outstanding for 90 or more days. This recently passed the same number for credit card debt.

Defaulting on college loans can come with harsh consequences the site said, such as the government taking 15 percent of the borrower’s Social Security and lasting damage to the borrower’s credit rating.

Whatever happens with the student loan interest rate, managing money will be an important priority for students. Student assistant in the Money Management office and organizational behavior and human resource management senior Paul Love said knowing priorities and keeping to a budget is important.

“I’m more of a conservative spender,” he said. “I don’t really like to spend money. I like to just have it. For someone who’s a little bit more of a spender, they would still put that in their budget.”

The UNT Money Management office is located on the third floor of Chestnut Hall and is open for walk-ins 10 a.m. to noon on Tuesdays from 1 to 3 p.m. Wednesdays and 10 a.m. to noon Fridays.

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