Students in the US Facing Doubling of Loan Rates

Starting today, July 1, federal government loans for students will start to increase with the interest rate reaching up to 6.8%. This is twice the former rate of 3.4% which has been implemented for quite some time now. News of the increase is bringing worry and frustration especially to those who are working overtime just to push through with their studies.

Lawmakers step forward

With the sudden increase of loan rates, concerned lawmakers are doing all that they can to calm the seas and settle relevant issues through a bill. Democrats in the Senate are devoting all their efforts and strength to finish the said bill which aims to extend the 3.4% rate for at least another year. This scenario is not a new remedy to this situation since it was also implemented by Congress last year.

Not everyone in Congress favors a one-year extension. With the students’ welfare in mind, the House Republicans prefer a solution that would keep the rates low but still capable of adjusting to future market rates accordingly. Temporary solutions implemented year by year is not acceptable anymore. This disagreement in tactics reveals that there are still a number of basic issues to tackle in order to settle loan rates discussions once and for all.

Hope for the best

With no solid response or solution to address student concerns with regard to loan rates, students are merely being told to strap up and get ready for a wild ride. Students are being told to prepare for the worst possible scenario and just hope for the best. According to Justin Draeger, President of the National Association of Student Financial Aid Administration, they are already giving out directives to the schools concerned so that the students concerned are informed of the increase in the interest rate.

A student’s point of view

One of the students whose loan is at stake is Rachel McGovern, an upcoming senior at the University of Florida. According to Rachel, since Congress went into recess, things are at status quo and it seems to her that student’s rights are completely being ignored. Until now, there are no clear indications on what is to happen before summer ends. A huge number of students are hoping to receive the loans they have applied for.

What’s does the future hold?

It is all very well that both the White House and the Congress agree that certain measures need to be implemented. However, both have no clear vision as to the specifics.

In a press conference held last week concerning student loans, Jack Reed, a Democrat from Rhode Island bluntly stated that students would rather receive no loans at all than be caught in the net of a deal gone sour. His frustration clearly reflects many students response to the interest rate increase.

Statistics show that a significant number of young graduates are already facing debt payments in the face of lack of employment. Second only to mortgages, student debt is considered to be one of the largest types of debt that consumers now bear.

Caption: Students are being subject to high interest rates starting on Monday