Student loans provide school funding for many undergraduate and graduate students.
Total student loan debt in the United States now hovers above $1 trillion, exceeding total credit card debt for the first time, and there are more than 37 million borrowers. Another shocking statistic: Almost 40 percent of those who took out student loans to help pay their way through college are under 30.
Congress has been deciding what to do with the rising debt and student loan interest rates. The deadline for a decision was today but Congress failed to reach a deal and interest rates doubled. Here is a breakdown of the student loan interest rate hike:
What: The interest rates on Federal Subsidized Stafford Loans have doubled from 3.4 percent to 6.8 percent. According to Congress’ Joint Economic Committee, this will cost the average college student an additional $2,600.
When: This change has been put into effect as of this morning.
Why: Back in 2007, Congress passed a bill that allowed student loan interest rates to gradually drop from the original 6.8 percent to 3.4 percent over the course of five years. In 2012, it was time to decide what would happen to the interest rates, but a consensus couldn’t be reached. An extension was put into effect to maintain the 3.4 percent interest rate for one year. That year has expired today and a solution has not been made.
Lawmakers could still potentially pass a bill to reverse the hike.
