Student Loan Interest Rates Going Up…Unless

April 30, 2012
Plain English Version

Current college students and those who attended college in the past owe over one trillion dollars in student loans. That is more than Americans owe on credit card debt.

Federal Stafford loans are available to all students who meet eligibility rules. On July 1, 2012, the interest rate on new Stafford student loans will double to 6.8 percent. Congress and the President are trying to find ways to prevent the increase. Observers say there is a good chance they will be successful because so many people are affected.

Pell grants are targeted to lower income students. Rising tuition means that the grants will cover less college costs. The rules for getting Pell grants have become more restrictive. Therefore, more students will need to seek Stafford loans.

The President and leaders of the House and Senate agree that interest rates on Stafford loans should stay at about 3.4 percent.  They do not agree on how to pay for the $6 billion cost of extending the current interest rate for one year.

In the House, Republicans passed a bill to have the money to come out of the Affordable Health Care Act. Democrats want to raise the money by ending tax subsidies for oil and gas companies.

The New York Times

The Christian Science Monitor

 

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