I follow a lot of financial blogs, reporters and news outlets on twitter, so when a tweet from @“FoxBusiness”:http://www.foxbusiness.com/personal-finance/2012/03/26/students-loan-rates-could-double-if-congress-doesnt-act-soon/?cmpid=cmty_twitter_fb said “Do you have student #loans? Your rates could double if Congress doesn’t act,” I decided to make it the topic of this week’s blog.
Student loan debt now exceeds $1 trillion, according to the Consumer Financial Protection Bureau. This is more than 16 percent higher than an estimate made by the Federal Reserve Bank of New York earlier this year. I knew student loans were skyrocketing, but I was unaware of the fact that students may face an increased rate of interest if Congress does not take action.With a deadline of June 30, Congress must decide whether or not to continue the provision from the 2007 passing of The College Cost Reduction and Access Act. This legislation reduces the interest rates on subsidized Stafford student loans to 3.4 percent from 6.8 percent over a four-year period for families that meet financial need requirements.
As nearly eight million students use these loans, I assume that there are a fair amount of students at MSU that use them as well. The article gives this laid out example: a student with the maximum $23,000 in subsidized loans over four years will see an increase in interest of $5,200 over a 10-year period or $11,300 over a 20-year period. Also of note is that the Pell Grant Program has been said to have a high chance of termination. This program allowed lower income students to borrow $5,550 for the 2011-12 award year without repayment.
U.S. PIRG reportedly has sent 130,000 to Congressional leaders from students, in which they ask them for their support in extending the interest rate cuts. I am not taking sides on whether the rates should be increased or decreased, but simply wanted to inform my readers of some political events that are affecting them in particular.