Congress looks to reverse student loan increase

12:28 AM, Jul 22, 2013   |    comments
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(WBIR) This week, Congress is expected to tackle a controversial issue that could end up costing East Tennessee college students thousands of dollars.

Starting July 1st, Congress allowed a deadline to pass doubling the interest rate of subsidized Stafford loans from 3.4 to 6.8 percent. It's estimated the new rate could increase costs for the average student borrower by $2,600.

But, Senate aides told 10News' Gannett partner, USA Today, the chamber would likely vote to reverse that rate increase by the end of the week.

USA Today: Student Vote Likely Next Week on Student Loan Deal

A bipartisan deal would allow undergraduate students to borrow loans at an interest rate close to what they would have typically paid in the past, 3.85 percent.

However, as the country's financial markets strengthen, those rates could once again go up to a capped rate of 8.25%.

Financial Planner Paul Fain said parents and their students could see their monthly payments go up anywhere from 10 to 20 dollars a month.

"Even though these rates might cap at 8.2, or up to 10%, if you're a parent, the rising tide, in theory, is a better economy is helping all boats," he said.

He said it's important for students and parents to financially plan their college experience ahead of time before setting foot on campus.

The rate increase impacts students like UT Sophomore Kevin Ridder. He said right now he likely owes $10,000 in students loans.He said he was unhappy with the way Congress is treating the country's students.

"Them doubling the interest rate, is like slapping me in the face," he said.

 

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