As members of the United States Congress lounged on exotic beaches or attempted to hack their way out of sand traps, students looking to take out federal loans now face an even deeper hole to dig themselves out of, as interest rates for student loans doubled this morning.
The federally subsidized Stafford student loan interest rates rose from 3.4 percent to 6.8 percent as a result of both houses failing to pass any reform or extension by the July 1 deadline. Because members of Congress are now on vacation for the Fourth of July holiday, students across the country are left to worry about future debt over hot dogs and normally celebratory fireworks.
However, there is good news according to Val Meyers, associate director of the MSU Office of Financial Aid. Payments on the loans only begin once a student is no longer enrolled in school and since these loans have a fixed interest rate, students who already have loans will not experience any increase, according to Meyers.
Even with these silver linings, students like accounting senior Adam Darga are concerned by the lack of action from representatives in Washington, D.C.
“If they don’t pass a bill to undo the damage then yes, I’m upset that the people who are supposed to be our voice let a deadline pass so now we have to pay for their ineptitude,” Darga said.
When asked if he was worried about repaying his loans, Darga said he wasn’t overly concerned.
“Entry-level jobs for accounting are around $50,000 a year, and if I live at home for the first year and commit $35,000 dollars to my loans I’ll be able to (have it) paid off within two years, barring unforeseen events,” he said.
Whether or not aid will come in the form of an extension of the lower rates or in new policy has yet to be determined.
Meyers reminisced, saying while a similar circumstance was avoided last year, the fact that 2012 was an election year might have pushed lawmakers to get things done.
“I’d be surprised to see it fixed, but then again I’ve been surprised before,” she said.
After legislators failed to address the rate increase, Sen. Carl Levin, D-Michigan, released a statement, addressing his disappointment with the Legislature’s lack of action.
“College is already too expensive, and working families have already borne more than their share of deficit reduction,” he said.
Levin added he hoped the Congress would band together to come up with a plan to set interest rates back to their 3.4 percent rate.
Levin was a co-sponsor of the Student Loan Affordability Act, which would amend the existing Higher Education Act of 1965 until June 30, 2015, according to Gordon Trowbridge, a speechwriter for Levin. That bill failed to reach cloture, meaning the Senate was unable to end debate and vote on the bill before the holiday break.
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