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WICHITA, Kansas – With Congress at home and the President in Africa, they failed to agree on a plan to keep student loan interest rates from doubling today, impacting millions of current college students.
“Sometimes I think about it and then I push the thought out because I don’t want to think about it because it’s probably going to be pretty bad,” said Anna Ehlers, a senior at Wichita State.
Unfortunately for students, the time to put off thinking about the cost of their loans has come to an end.
“It’s hard for college students because we don’t make enough money to pay for our classes and if the loans go up, we’re going to have to pay more later,” said Hoang Phung, a sophomore at WSU.
The interest rate on Stafford loans jumped from 3.4 percent to 6.8 percent due to inaction by the federal government. With the government set to earn billions in additional revenue from higher interest rates, students at WSU called it political wrangling with them in the crosshairs.
“They should keep them low,” Ehlers said. “I think there are other ways for the government to make money.”
The rate jump means a student who takes out the maximum $23,000 Stafford loan would pay an extra $4,600 in interest over the life of that loan.
Loans are hampering the ability of students to get solid financial footing upon graduating, according to Scott Walker, a financial planner with Walker Group in Wichita.
Graduates are putting off “saving for retirement, buying their first home, even getting married, because of the overall expense they have with their student loan,” Walker said. “Well, you double that interest rate, and you’ve just made that greater.”
The collective student loan debt in the US is in excess of $1.1 trillion, according to a debt clock provided by Fastweb. The debt increases by almost $2,900 every second.
There is a chance the rate hike will only be temporary. The U.S. Senate is expected to vote on a measure next week that would restore the 3.4 percent interest rate for another year and make it retroactive.