College loan rates double, threaten to slow students' education
Students who take out Subsidized Stafford Loans to attend college believe they have every right to be angry with Congress, and they are. They blame the seemingly non-stop gridlock in Washington, specifically politicians who they say have let their partisanship overtake the needs of Americans.
The increase from 3.4 to 6.8 percent means the average Subsidized Stafford Loan borrower will pay roughly $2,600 in additional interest over the course of their loan.
For some, the increase could postpone their first semester at college. For young adults, it may mean putting off marriage, house and family.
William Gustafson, Ph.D., Director of Texas Tech's Center for Financial Responsibility, said putting off major expenditures will cause a decline in economic activity and consumption.
"That level of debt can cause them to put off that kind of decision. And of course one of our major concerns is trying to get our economy back because we're a consumption-based economy," Gustafson said. "People buying things is what causes other people to have jobs, to resupply those things."
Students have recently begun a Facebook page titled, "Don't Double My Rates". One post says, "The practical economic argument is important, but almost no one is making the larger economic argument, that expanded access to higher education is good for everyone, period.
Another reads, "Students and their families can't afford to another increase in the cost of college, and need a comprehensive fix to the student loan interest rate. We are asking members of Congress to step up and take the lead on stopping student loan interest rates from doubling."
Lawmakers say they may be able to lower the interest rate to 3.4% after the July 4 holiday, and make the cut retroactive. But some political observers say there are reasons to be skeptical. Congress has known for a year about the July 1st deadline, yet failed to act until last week. And it has had little to show in the way of meaningful legislation.