Many collegians may face additional obstacles in paying for school if Congress cannot reverse Monday’s doubling of student loan interest rates.
The federally funded Stafford loan’s interest rates climbed from 3.4 percent to 6.8 percent after Congress failed to reach a deal to avoid the hike. Lawmakers are expected to resume their attempt to reinstate the lower rates for another year after they return from the Fourth of July holiday.
Many in Washington are optimistic that interest rates will be down again before students start returning to their schools for the new academic year. If they remain doubled, though, Congress’ Joint Economic Committee estimates students could incur a cost of about $2,600, leaving them to decide whether or not a loan would be beneficial.
If Congress does not reverse the hike, the doubled rates are expected to affect the 7 million people slated to take out a loan this year, according to CBS News. The increased rates will not influence the finances of those who have already taken out loans.
Congress has long been aware that the climb would occur at the beginning of July, and last year’s presidential race saw both the Democratic and Republican sides vowing to maintain the lower rates. Still, the Democratic Senate and Republican House could not close in on a deal.
CBS News contributor and analyst Mellody Hobson said Monday that doubled rates could have a dismal impact on the economy, as debt from student loans could decrease the chances of college graduates purchasing a home or having a family.
“Just buying a house and starting a family has $145,000 in economic activity tied to it,” she said. “And so not doing that could slow down the economy.”