Student loan interest rates are set to double on Monday after members of Congress failed to agree on how to keep costs down before a July 1 deadline.
Next week, interest rates on Federal Subsidized Stafford loans will jump from 3.4 percent to 6.8 percent.John Curl is director of financial aid and scholarships at the University of Utah, where he says student’s take out between 9 and 10,000 individual subsidized loans each year. But he says they won’t feel the sting of higher interest rates until after graduation.
“Everyone is kind of the same. That’s something I’ll deal with later," Curl says. "And unfortunately that can be painful.”
With subsidized loans, students aren’t required to pay interest until after they graduate, unlike unsubsidized loans where interest builds immediately.
Curl says he would prefer Congress keep rates as they are, but he fears efforts would be made in the meantime to seek cost-savings elsewhere. In the past few years Congress barred graduate students from getting subsidized loans and put a limit on the number of years any student could get subsidized loans.
“You know, it’s hard to say what would benefit the student of all the decisions that they were going to make, because I really think that at some point in time, the cost was going to come back to the student anyway," Curl says. "It’s just a matter of how and when.”
Democratic Congressman Jim Matheson told KUER in an interview earlier this year that he supports extending the current rates.
“There is pretty broad consensus that we want folks to go to college and we want to have a program that deals with some of the challenges of affording that and these lower student loan rates help in that respect," Matheson says."
Matheson is a cosponsor of a bill in the House this spring that would extend current student loan rates for another two years. That bill has yet to reach the House floor. Senate Democrats say they plan to vote on a one year extension when they return from the fourth of July recess.
Republicans as well as President Obama have proposed switching to market-based rates, while most Democrats want more assurance that rates will remain low.