UNDATED (WRN) Interest rates on new federal student loans could soon double.
An estimated 160,000 Wisconsinites who will borrow student loans would have to pay twice as much in interest rates after July 1, according to WISPIRG, unless Congress does something about it. “We’re getting down to the wire,” says WISPIRG Director Bruce Speight. He says “Congress needs to act or else students will be burdened by increasing debt from the interest rates on federal Stafford loans doubling from 3.4 percent to 6.8 percent.”
Speight his findings show thats translates into a $915 increase in debt per student, per loan.He explains Congress needs to act by July 1, otherwise individuals taking out new subsidized Stafford student loans will be impacted with an increasing debt burden that would have a huge impact on the economy. ”In the form of $145 million that students otherwise could spend in our economy in Wisconsin buying a home or a car.”
Just last year, student debt nationwide hit the $1 trillion mark, passing credit card debt as the country’s top form of consumer debt. Speight says the average college graduate with loans in Wisconsin currently has $26,238 in student debt.
The low 3.4 percent rate was set to expire in 2012, but Congress and the president had temporarily extended that rate for one more year. That extension is about to expire.