Student loan rates double after Congress stalls
Some 7 million borrowers will be hit this fall with new costs of 6.8%, though some lawmakers are still pushing to delay any increase for an additional year.
The rate is double the 3.4% students previously received for federal Stafford loans, and it could be a tough adjustment for students borrowing in August for the fall semester. The average college student who borrows for four years will pay $4,000 more, the White House estimated.
There's still time for Congress to cut a deal, although whether that will happen is unclear. Democrats set the rate at 3.4% before Republicans took control of the House in 2011, The New York Times reports. Republicans extended the low rate for one year last June but did not repeat the move this year.
Republicans and President Barack Obama want to tie student loan rates to the 10-year Treasury note, which lately has seen a rate of a bit more than 2%. But the sides are quibbling over whether the rates should have a cap and how often they would reset. The Republican bill would cut the budget by $3.7 billion over 10 years, the Times reported.
Two Democratic senators are pushing to keep the rate at 3.4% for an additional year while Congress tries again to resolve the issue. That may still happen if a vote takes place after Congress returns from its July 4 recess.
What should students do in the meantime? Here are five tips from Reuters:
- Use up your 529 savings account first to pay for college.
- Look at alternative loans, such as a home equity line of credit for parents.
- Shop around.
- Find an off-campus job.
- Make sure college is right for you.
Given the number of "Occupy Somethings" that sit around major metropolitans with useless degrees and high student debt, this maybe a blessing in disguise for new students. Don't go away to big money schools until you can afford it. You have options;
1.) community colleges
2.) state schools vs. private colleges
3.) military service (GI Bill)
4.) go to work first, earn and save some money
Just another scam.
Those that really do attend legitimate schools find themselves flipping burgers and going into default. How is that helping anyone?
1. major in something useful
2. If you're not sure about your future work a couple years or go to CC
3. If possible choose a state school vs private school
there 3 easy steps to keep your total amount borrowed down or have a better chance at making a good living. Whether it be parents, teachers, guidance consolers, ect. The youth need to know these facts.
All the politicians out there with college degrees and not one of them knows what a monthly income statement is!! Don't you people in DC know how to balance a checkbook for God's sake!!! Dumbest people on the face of the earth!! Lets steal a little bit from the senior citizens monthly paycheck and then charge double the finance rates on student loans while letting welfare and medicare fraud run rampant and granting every Tom, Dick and Harry citizenship for "FREE" programs!!!! Incredible!! They are so out of touch with reality. I believe they should change the term and age limits of all politicians immediately and make every one of them submit to a logic test. They would all fail miserably. Get rid of everybody over 60 years old.
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