WEST LAFAYETTE, Ind. (WLFI) - Some student loan interest rates are expected to double by next month.
Unless Congress makes some changes before the July 1 deadline, some students will be digging deeper in their wallets when paying back student loans.
"Presently the Subsidized Stafford Loan interest rate is 3.4 percent, which it has been for the last two years," Executive Director of Financial Aid at Purdue, Ted Malone said. "It is scheduled to jump to 6.8 percent on July 1."
Malone said incoming freshmen who borrow the maximum amount of subsidized loans, which is $23,000 would have to pay an extra $5,000 during a 10-year repayment period if the rate jumps. But undergraduate students who already have thousands of dollars out in student loans, and haven't graduated yet, will also feel the pinch.
"The new interest rate would affect any loan that's disbursed for the first time after July 1," Malone explained. "So it would affect continuing borrowers who are getting new loans for next school year."
During the past seven years, the average student loan debt has grown from $17,000 to $27,000 -- that's a 58 percent increase.
"Congress really needs to take some time and look at the system and do some simplifications of programs," Malone said. "I think they should sit down and figure out what their actual objectives are."
If this warning sounds like deja-vu, Malone said it is. Last year, Congress voted on a one-year abatement on raising interest rates but that extension is about to expire.
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