Instead of planning road trips this summer, college students across the nation may have to save money for the possibility of a 100 percent interest rate increase in subsidized student loans.
Subsidized Stafford Student Loans are funded by the federal government and provide students with interest free loans until six months after graduation.
This year, students took out the loan with a 3.4 percent interest rate, but students in the fall may have to take out a loan with double the interest.
The College Cost Reduction and Access Act of 2007 implemented a four-year plan to lower the then-6.8 percent rate to today’s rate of 3.4 percent. But the plan expires July 1, bringing the rate back up to 6.8 percent.
If Congress does not pass Democratic Representative Joe Courtney’s bill to retain the 3.4 percent by July, Cal State Long Beach students will have an extra burden to carry for the fall semester.
“About 12,000 students are currently borrowing Stafford Student Loans,” said Nicolas Valdivia, director of Financial Aid Enrollment Services.
According to Valdivia, if students borrow a $5,000 loan for the year at 3.4 percent interest, the interest for the year is $170. He went on to explain that, at 6.8 percent interest, it becomes $340 for the year, so it is a $170 difference of interest per year.
Even at 6.8 percent interest, Valdivia said it is still the best loan but it’s going to cost more.
Junior chemical engineering major Jake Seuser said he feels even more pressure to graduate sooner.
Because his major consists of a lot of units, Seuser said he will probably take an extra semester, and the loans will be a struggle to pay off after graduation.
“Taking out one loan may not seem like too much to pay back, but once you have taken out a few, it adds up,” Seuser said. “I plan on working 40 hours a week over summer to save for loans as well as everyday expenses.”
Freshman biology major Melissa Pineda said the possible loan increase will affect her summer plans.
She said she plans on cutting back summer activities if the interest rate changes.