Posted at: 07/01/2013 10:17 PM
Updated at: 07/01/2013 11:26 PM
By: Lynette Adams
Some students are seeing double. That's because student loan interest rates have skyrocketed. Rates on government backed loans called subsidized Stafford loans are now 6.8%. The rates were 3.4%. That breaks down to about an extra $2,600 per student. It's all because lawmakers couldn't agree on a deal before they left for their holiday break. They plan to debate the issue again sometime next week.
So what does that mean for students now? It means a college education for people who depend on student loans will now cost more.
Katie Hill, Honeoye Falls-Lima senior, said, “I'm definitely going to have to take out loans for college and that's concerning because that's definitely going to extend the amount of time that I'll have to pay for loans.”
Katie Hill is a senior at Honeoye Falls-Lima High School. She's already looking at college and worries if she gets accepted to her first choice, she may not get to go there.
Hill said, “A lot of people tell you to look at where you want to go and think about paying for it later. But it really nags at you that you probably aren't going to go to that top school that you got into if it's really going to put you behind in debt.”
Hill is like a number of students who may have to make some hard choices now that student interest rates have doubled. It's estimated at the rate of 6.8 percent, the average college student is going to pay $2,600 more for their college education than they would have a week ago.
Claire Herrman is a sophomore at St. John Fisher College. The Williamsville native says she wouldn't be there without students loans. While she's not happy about paying more in interest rates, she says she appreciates the opportunity student loans afford.”
Herrman said, “I'm actually a nursing student, but I know that when I go further in my career, yes I'll have these student loans, but it got me through college and I'll be able to work it off. If you're thinking long term, in general, you can get a job and work really hard, but you need to get that first step to get into college and if you can't pay for it you can't get that education to begin with.”
The new rates only affect students going into college this year and will not affect graduates who will have to begin paying back their loans.
Financial aid advisor at MCC reacts to student loan increase
News10NBC went to MCC to talk with the financial aid advisor there about his take on the increase. He says parents and students have been calling a lot Monday and in the last couple of weeks when talks of the student loan increase all started.
Jerome St. Croix said, “We always explore how much are you prepared to payback when the loan is in repayment and try to make plans and arrangements to have as much money as possible so you're borrowing is reduced when you're in college."
St. Croix, along with parents and students, are hoping that Congress can reach a better decision on the loan rates once they return from break.
Kirsten Gillibrand reacts
There is a lot of confusion about the student loan rates even amongst members of Congress. On Saturday, Congresswoman Louise Slaughter said there was a deal in the works that would lower the interest rate back to 3.2%. Slaughter said she wasn't 100% sure of that, but said that's what she expects when she returns to Washington next week and that this reduction would be retroactive to today,
But when News10NBC spoke to Senator Kirsten Gillibrand, we heard something different.
Senator Kirsten Gillibrand said, "What Congress needs to do is come back in session next week and agree to a resolution to at least keep the interest rate low for at least the next year or two while Congress works on education reform, that would make a difference as well.
News10NBC's Lynette Adams asked, "What does that mean though, can parents, students expect that next week there will be a deal to return interest rates to 3.4 percent?"
Gillibrand said, "We hope so, we hope so. I am certainly going to advocate for that short term two year fix so we have more time to have longer time to do the long term negotiations, but I also think that it's important that if you should be able to lower your interest rate if you have a loan today renegotiate it back down for students who have loans today."