TribLIVE

| USWorld

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Students may face rate hike on loans

Email Newsletters

Click here to sign up for one of our email newsletters.

Daily Photo Galleries

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

By The Associated Press
Thursday, March 28, 2013, 8:33 p.m.
 

WASHINGTON — Incoming college freshmen could end up paying $5,000 more for the same student loans their older siblings have if Congress does not stop interest rates from doubling.

Sound familiar? The same warnings were made last year. But now the presidential election is over and mandatory budget cuts are taking place, making a deal to avert a doubling of interest rates much more elusive before a July 1 deadline.

“What is definitely clear, this time around: There doesn't seem to be as much outcry,” said Justin Draeger, president of the National Association of Student Financial Aid Administrators. “We're advising our members to tell students that the interest rates are going to double on new student loans, to 6.8 percent.”

That rate hike hits only students taking out new subsidized loans. Students with outstanding subsidized loans are not expected to see their loan rates increase unless they take out a new subsidized Stafford loan. Students' non-subsidized loans are not expected to change, nor are loans taken from commercial lenders.

The difference between 3.4 percent and 6.8 percent interest rates is a $6 billion tab for taxpayers — set against a backdrop of budget negotiations that have pitted the two parties in a standoff. President Obama is expected to release his budget proposal in the coming weeks, adding another perspective to the debate.

Last year, with the presidential and congressional elections looming, students got a one-year reprieve on the doubling of interest rates. That expires July 1.

Neither party's budget proposal in Congress has money specifically set aside to keep student loans at their current rate. The House Republicans' budget would double the interest rates on newly issued subsidized loans to help balance the federal budget in a decade. Senate Democrats say they want to keep the interest rates at their current levels, but the budget they passed last week does not set aside money to keep the rates low.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Nation

  1. Minn. dentist laying low in slaying of lion
  2. Fetal parts in Planned Parenthood lab shown in 4th video
  3. Only 1 co-op health program, of 23, made money in 2014, report says
  4. Protesters ousted in bid to block Shell icebreaker on Portland river
  5. Christian college in Illinois to stop providing health care over Obamacare
  6. McClatchy: Emails on Clinton’s private server contain Benghazi information
  7. Wildfires force hundreds from homes in California
  8. Piece of plant found on island on way to France for analysis
  9. Ex-Cincy cop pleads not guilty, posts bond
  10. VA whistle-blowers aghast
  11. Highway bill on Obama’s desk extends funding 3 months