Planning on taking out student loans? On July 1, 2013, subsidized Federal Stafford student loan interest rates doubled from 3.4% to 6.8% in one swoop. Haven’t heard too much about it? That’s because that rate might not ever affect anyone’s loans. Does that surprise you?
Subsidized Stafford loans are typically issues to students showing need. Consequently, only about 26% of all loans issued are through this program. Student loans are usually issued around August or September right before a semester begins. This rate increase will only affect new loans.
Should the White House and Congress choose to act, and let’s hope they do, the rate might be retroactively rolled backwards. This new rate of 6.8% might then never affect anyone’s loans. But, there are a lot of words like ‘might not’, ‘maybe’, and ‘possibly’ included in those sentences. When faced with the same situation last year, Congress chose to temporarily keep the rate low for just one year. This year, Congress has indicated that it would prefer a more long-term solution.
There are a number of competing pending bills in both the House and Senate, but who knows what will pass. Most of these bills are attached to other things that either party might not agree to. Let’s hope that Congress chooses to vote in a way that will not saddle college students with more debt than necessary.