What the Stafford Loan Interest Rate Hike Means for Students
Interest rates doubled on new Stafford loans, but that’s ‘not the end of the world,’ one expert says.
July 3, 2013 RSS Feed Print
Interest rates on new Stafford loans jumped Monday after lawmakers failed to reach a deal.
Student loan interest rates doubled on Monday, jumping from 3.4 to 6.8 percent, but it will be at least a year before borrowers feel the impact.
That's because the rate hike only applies to new loans – specifically new subsidized Stafford loans – taken out by undergraduates on or after July 1.
Incoming college freshmen borrowing for the fall semester will not be repaying those loans until six months after they leave school. For those who don't drop out, that is another four, five or even six years down the road. Seniors graduating in December won't feel the pinch until this time next year.
"It's not really a big deal. It's not the end of the world," says financial aid expert Mark Kantrowitz, publisher of Edvisors.com.
[Discover loan repayment tips for college dropouts.]