Interest Rates On Some College Loans To Double In July
Unless Congress acts, interest rates on certain college loans are set to double this summer. WNPR looks at what that would mean for Connecticut students.
More than 84 thousand college and university students in Connecticut had subsidized Stafford student loans last year. Their interest rate was 3.4% thanks to the College Cost Reduction and Access Act which locked in a low rate for four years.
But that runs out in July, and Jane Ciarlegio executive director of Connecticut’s Office of Higher Education, says rates will jump to 6.8% for most borrowers in the state. "There are 68 schools that offer these loans, so this would affect almost every middle class student who wants to continue with their education or start their education."
Connecticut Congressman Joe Courtney has introduced legislation that would lock in the low rate. "My bill makes it a permanent rate and obviously there’s a lot of different ways that you can tweak that to get the necessary votes to pass."
He says President Obama is calling for a one-year low rate lock, "…which again at this point with the track record of this Congress and Republican opposition in the House which has been ferocious, that may be as good as we’re going to be able to get this year."
Critics say extending the lower rate kicks the can down the road and in the end is more costly.
But Courtney says there are ways to make up the difference, starting with tax loopholes. "Oil companies have a tax credit under the Bush energy plan which totals almost exactly the amount we need to cover the Stafford student loan program."
For the first time, student loan debt has surpassed credit card debt - and supporters of the lower rate in Connecticut say the state depends on an educated workforce.