Student Loan Interest Rates Double
The burden of college costs is about to become even more challenging for many students who are pursuing their education. Rates on newly issued subsidized Stafford loans are set to double to 6.8% after the Senate failed to reach an agreement to avoid the scheduled increases. That means that students who have taken out these loans -- which are currently numbered at 7 million - can expect to pay hundreds and even thousands of dollars more in interest. For those who are borrowing the maximum amount and paying back their loans over the next 10 years, the added cost would amount to around $4000, according to the Institute for College Access and Success, a nonprofit organization.
The average borrower will notice that costs go up by $2600, according to Congress Joint Economic Committee. New York families are already beginning to feel the pressure associated with the change. Marc Bernstein, a legal recruiter from Kips Bay, has two daughters heading off to college in the fall. Bernstein said that he might be affected by the interest rate hike, noting "It will be a hardship. It will obviously impact us on a monthly basis and that cost will translate into quality of life changes. When the rates go up, they affect everyone. My younger daughter feels it. She knows her parents are going out on a limb for her."
A Senate vote on a bill that would keep the current lower rate in place for another year is scheduled for July 10. But even if that happened, the student loan crisis would still be a problem. The total student loan debt for the country is near $1 trillion dollars now. Some experts have acknowledged the issue by trying to provide some advice for those who are still seeking to earn their education despite the financial challenges. One option is to consider going to a less expensive school. Students are advised to start considering beginning their education at a community, city, or in-state college and then trying to transfer into their dream college or university later on. "For employers and graduate schools, it's much more about where you graduated as opposed to where you started," said Eric Greenberg, president of Greenberg Educational Group, an educational consulting company in Manhattan.
Another option is to not just focus on the options available with four year colleges. Vocational schools may be another option, depending on your goals and your major. "There is a stigma associated with vocational schools," Greenberg said. "As a practical matter, vocational schools often offer income possibilities that could exceed what one could earn otherwise." Students should look to start spreading out their payments to try to minimize the amount of debt they may incur while in school. "Look at tuition installment plans which spread out college costs over a nine-to-12-month period for an upfront fee, but no interest," said Mark Kantrowitz, publisher of Edvisors.com, a network of websites about college admissions and financial aide.
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