This fall, college students are going to be slapped with even more debt when borrowing for college. President Donald Trump has proposed eliminating subsidized federal student loans, which will significantly raise interest rates for student loans. The new rates will be:
- 4.45 percent for Stafford student loans; up from 3.76 percent
- 6 percent for Stafford graduate student loans; up from 5.31 percent
- 7 percent for Parent PLUS loans; up from 6.3 percent
These rates will apply to new loans made from July 1, 2017, to June 30, 2018.
Mark Kantrowitz, the publisher of Cappex, a website that helps families search colleges and the scholarships, said:
“The rates are going up because the Federal Reserve has started raising interest rates at a regular pace and we can expect that they’ll continue to go up. I wouldn’t be surprised if we see an increase in the federal student loan interest rates each of the next few years of between half and three-quarters of a percentage point.”
Penelope Wang, deputy money editor at Consumer Reports, said:
“This small jump in the interest rate of the loan is not going to be a deal breaker for most students. The bigger problem is the overall student debt in the U.S. and this certainly does not make the situation any better.”
While our nation is trying to find ways to lower the cost of college for Americans, this will raise costs for millions of students.
Kantrowitz also said:
“Removing the subsidy is equivalent to almost doubling the effective interest rate on these subsidized loans. About half of all students graduate with some amount of subsidized Stafford loans — the average for a Bachelor’s degree is around $13,000 — so that is going to increase the cost of paying for college much more so than the change in the interest rates.”
Trump’s proposed budget also seeks to eliminate the Public Service Student Loan Forgiveness program. It will save the government millions, but it will put a huge burden on many college graduates going into teaching or other public service fields that don’t pay as much.
https://youtu.be/Zks5OPWhyCg
Featured image via Twitter.
