By Alex Hall
College students could soon be paying double the interest rates for the federal subsidized student loans.
The rate for federal subsidized loans is set to return to its previous rate of 6.8 percent on July 1.
Under the College Cost Reduction and Access Act of 2007, the interest rate had been cut from 6.8 percent to its current 3.4 percent, and it also raised the Federal Pell Grant to its current maximum of $5,500.
Unless Congress renews the College Cost Reduction and Access Act the original rate and immediate interest rate will begin again July 1.
“It was already scheduled to go back to 6.8 percent. What the president (Obama) is doing is trying to get congress to delay the 6.8 percent increase,” said Eddie White, director of financial aid.
The raise in the interest rate will impact the nearly 8 million students nation-wide who take out the subsidized loan from the government, said Mark Kantrowitz, publisher of FinAid.org and Fastweb.com.
According to consumer group U.S. PIRG, students that decide to take out the maximum of $23,000 in subsidized loans over a 4-year period will have their interest increase by $5,200 over a 10-year re-payment period.
A payment on a $19,000 loan is now approximately $200 a month. The higher rate would make it around $230, White said.
The current proposed plan does more than just raise the rate on subsidized loans. It also cuts $8 billion out of the Federal Pell Grant Program.
Graduate students will no longer be able to get subsidized loans from the government. If this goes through the government will only be allowing undergraduate student to receive subsidized loans.
Graduate students can still borrow the same amount of money, but it will be unsubsidized, White said.