Student Loan Interest Rates Double Today

07-01-2013Children & Students

Starting Monday, July 1, 2013, approximately 7 million students who will accept subsidized government loans will see their interest rates double to 6.8%. The higher rates that go into effect on July 1 only apply to new loans. These loans are generally awarded to only about a third of undergraduate students in financial need.

Undergraduates, who take out unsubsidized student loans from the government, have been paying the 6.8% rate since 2007.

Democrats in the Senate are trying to extend the 3.4% rates for another year — just like Congress did last year. House Republicans have said they’d prefer a longer term solution, like the one they passed back in April to keep rates low for now but rise along with market rates in the future. If there is any action, it will like be retroactive to July 1, but there was no clear indication any deal would be reached before most students will be taking out loans for the Fall semester.

By the way, in 2011, students owed an average of just under $27,000 in student loans. The 3.4% increase in interest will cost students over $900 more per year.