If you thought student loans were bad enough, wait until July 1 of this year passes – that’s when you will see student loan interest rates DOUBLE from their current rates.
An interest rate cut set by the government pulled back interest rates on subsidized Stafford loans, which account for almost half of all federal student loans, to hover around or just below the 3.4% mark. If Congress doesn’t step in and renew these cuts, then we could see rates shoot back up to 6.8%.
If this comes to pass, then we will find ourselves with millions of students and graduates being forced to shell out $5,000 or more per month.1 This would not be much of a problem if there are plenty of high-paying jobs around, but the stagnating economy makes decent-paying jobs extremely difficult to find for most graduates.
This hike also coincides with a series of education cuts that will dig deep into federal loans and grants, which will cause colleges to raise their tuition fees as well. This double-whammy will press students even further into spiraling debt even before they graduate; fueling unemployment and unrest at the same time.
President Obama mentioned something in his State of the Union address about keeping interest rates low, but we will see if he can keep to his word and get this done before the next school year comes rolling around the corner.