By, Alejandra Arana |Staff Writer|
Student interest rates on subsidized loans will double on July 1 if Congress does not take action to stop it. The College Cost Reduction and Access Act of 2007 requires that subsidized loan interest rates will double from 3.4 percent to 6.8 percent in a few months.
These rates will only apply to newly established loans that are taken out after July 1 by students who are currently enrolled or will be enrolled after the date.
According to WebMath.com which is a compound interest calculator, a $25,000 loan taken out with a 3.4 percent interest rate will cost a student up to$39,913.31 over 30 years. A loan taken out with a 6.8 percent interest will cost $58,673.25 over the same period.
According to a statement made by Sen. Sherrod Brown (D-OH), students still attending school after July 1 that need to take out new federally-subsidized Stafford loans would pay higher rates on the new loans.
Sen. Brown proposed a counter act, Stop the Student Loan Interest Rate Hike Act of 2012 in order to keep the interest rate of 3.4 percent
The act was turned down in a vote by other senators May 24 and unless Sen. Brown and his team meet their goal, students will end up paying even more for their education.
“I find it unfortunate that other countries are surpassing us intellectually and they do it by not charging their citizens a single dime to go to school,” said student Al Meullier.
Meullier also went to on to state that if this fee increase does pass, more and more struggling students would have to stop coming to school.
“I already took two years off because I could not pay for classes and tuition, and hearing that this could happen I don’t know if I can come back next year,” said student Tayler Gainey. “There are plenty of students out there right now that struggle to even pay for the parking pass with out taking out any loans so it will get even more difficult.”
Federal loans start accumulating interest six months after the student has graduated, leaving a grace period for the student to start making payments.
If Congress does not take action to stop the pending act, students that need financial aid will be forced to take out higher interest loans.