If you’ve been following the news, then you know there’s been a lot of talk about the looming deadline for student loan interest rates. If Congress fails to act by July 1, interest rates on certain federal student loans are scheduled to doublefrom 3.4% to 6.8%, which will borrowing for school a whole lot more expensive.
There have been several proposed solutions to deal with this, several of which I outlined in my prior blog post (just click that link in the previous paragraph). Unfortunately, and perhaps unsurprisingly, Congress has failed to agree on a solution. And time is running out.
I’ve been getting a lot of questions about whose student loan interest rates will be impacted by this if Congress does not get its act together. Well, the short answer is, it probably won’t impact most of you. If you already have federal student loans, those interest rates aren’t going to change based on this specific issue. The interest rates that are at stake in this debate are for new federal Stafford loans that will be issued to students after July 1. So if you’re in school now, this won’t affect your existing loans, and if you’re out of school and in repayment, it won’t affect you either. It will impact you, however, if Congress fails to act and you will be taking out new federal Stafford loans after July 1 of this year.
So, we’re really talking about a relatively small subset of student borrowers who are going to be negatively impacted by Congress’s incompetence. However, what is most disappointing about this for me is that if our nation’s leaders cannot even come up with a consensus solution to solve this relatively small problem, how are we ever going to see real comprehensive student loan reform? I’m not giving up hope (and neither should you), but I can’t say I’m feeling encouraged right now.