WASHINGTON – The interest rates on some student loans doubled after Congress failed to extend lower rates before the July 1 deadline.
The rates increased from 3.4 percent to 6.8 percent for those renewing or taking out subsidized Stafford loans past July 1. Undergraduate students with demonstrated financial need are eligible to receive subsidized Stafford loans, according to the Department of Education.
An estimate of 7.4 million students nationwide will borrow subsidized Stafford loans to finance their college education this year, according to the Department of Education.
More than 150,000 students attending Colorado colleges and universities will receive about $570 million of Stafford loans during the 2013-14 academic year, according to the Department of Education.
The average savings per Colorado student is $915 under the previous 3.4 percent interest rate, according to The White House.
Approximately, 47 percent of all undergraduate students attending Fort Lewis College received some kind of federal student loans during the 2011-12 academic year, according to the National Institute for Education Statistics.
The House passed a bill temporarily extending the lower rates. However, the Senate remains divided as Democrats push to continue the 3.4 percent rate for another year while the Republicans advocate for tying the rates to the 10-year Treasury notes.
Sen. Mark Udall, D-Colo., urged Congress to renew the lowered interest rates in a June 5 news release.
“A college education is the surest way for Coloradans to secure a high-quality job and build a successful future,” he said in a news release. “But, even with the best education, high loan rates and debt can cripple a career before it even begins.”
Julie Snider-Popp, marketing director with Durango School District 9-R, said the future impact of the heightened interest rates on such loans is still unknown because it “is still new and preliminary.”
Congress is expected to reduce the increased student loan interest rates upon its return from theFourth of July recess July 8.
Paige Jones is a student at American University in Washington, D.C., and an intern for The Durango Herald. Reach her at pjones@durangoherald.com.
