Federal Student Loan Interest Rate Could Double

, Posted: Tue, April 24 2012 at 5:45 PM, Updated: Tue, April 24 2012 at 6:21 PM

Southern Oregon University Junior, Lexie Schmidt is already nervous about having to pay back her student loans.

"They're a little overwhelming," began Schmidt.

"It's going to take a really long time [to pay them off], I mean I have thousands of dollars taken out already."

However after learning that her subsidized Stafford loan interest rate could increase from 3.4% to 6.8%.

"That would be quite a hardship, I can't imagine how much more i'd have to be paying if it pretty much doubled like that," said Schmidt.

When Democrats took over the House in 2007, they lowered the interest rate from 6.8% to 3.4%. Now it's just going back to what it used to be...that's if congress doesn't act by July 1st.

"It'd be great if they could keep it at 3.4-percent"

There are bills in both the Senate and House that would cap the student loan interest rate at 3.4% for at least another year. But if that happens, the Federal Government could stand to lose $5.8- billion.

What does it mean for schools if the low interest rates aren't extended?

"It could have an impact on applications for college on the other hand we know that a college education is important to getting a good job, so for colleges that are more affordable like SOU, it may actually send more students our way," said Jim Beaver, spokesman for Southern Oregon University.

But for students who are every year taking out more loans, their only hope is to score a well-paying job to pay off those loans. It's a dim outlook especially when finding a job is hard enough.

If Congress does nothing, the higher student loan interest rate would mean students will be paying roughly $5000 more over a 10-year repayment period.

The higher rate would begin during the 2012-2013 school year.

 

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