Student loan interest rate increase would affect thousands in Colo.
Updated On: Jun 05 2013 11:27:04 PM CDT
If Congress doesn't act quickly, interest rates on subsidized Stafford Loans issued after July 1, 2013 are set to double to 6.8 percent.
It's disheartening news for 19-year-old Brittany Moore. She just finished her freshman year at Adams State University in Alamosa, Colo. With 10 siblings in a low-income family, student loans are her only way to get through college. She's already taken out $10,000 in loans and expects to take out more each year to finish college.
"Poor college student is true," Moore said. "It's not just a stereotype."
Only interest rates on subsidized Stafford Loans would be affected by the July change. Subsidized Stafford Loans are need-based loans for undergraduate students only. The loans don't accumulate interest while students are in college. Need is determined by the Free Application for Federal Student Aid (FAFSA) form.
Loans issued before July 1 will come with 3.4 percent interest.
The 6.8 percent rate is the old interest rate for these loans. Congress passed a law in 2007 that gradually lowered interest rates to 3.4 percent over five years, but allowed the rate to rise back to 6.8 percent in 2012. In 2012, Congress passed a stopgap measure that extended the 3.4 percent interest rate for a year. That year is nearly over.
"I didn't know it was coming this quick. I thought we might have had some time to figure some things out," said David Bullman, Moore's stepfather.
"Every year she's going to apply (for student loans) and if it keeps going up, it's just more she's has to deal with," Bullman said. "It's ridiculous."
According to U.S. Department of Education statistics, 154,128 students enrolled at Colorado colleges and universities will receive more than $572.4 million in Stafford loans during the 2013-2014 school year.
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