Federal student loans could increase by summer - WTVM.com-Columbus, GA News Weather & Sports

Federal student loans could increase by summer


The clock is ticking on a 2007 law that has kept student loaninterest rates low. That law for federally subsidized Stafford loans willexpire this summer.

Laterika Peak is a junior Communications major at Columbus StateUniversity. Because of financial hardship, she's taken out students loans topay for her college education. And already she's come up with a plan to paythat money back.

"I'm going to start my payments early actually. I've alreadycalculated it, it will be $272 a month that will take the place of my carpayment so I will be done within five years."

But if Congress doesn't act soon, those five years may turn into10 or more for students like Laterika.  

A measure put in place back in 2007 brought subsidized Staffordloans to 3.4 percent interest. In July that measure will expire and interestrates would double, up to 6.8 percent. 

"People already can't really pay them now so increasing themwill only put our economy into more debt and people will still continue to filebankruptcy." 

CSU Dean David Lanoue says student loan interest rates have beenan ongoing battle in Congress and the 2012 presidential race. 

"President Obama has already come out saying that he wantsthe rates to stay the same now. Mitt Romney is saying the same thing so you dohave agreement now between Democrats and Republicans."

Which Lanoue says sets the stage for a fair outcome with studentloan rates. If a resolution is not reached by the July 1 deadline, thenstudents borrowing the maximum $23,000 at 6.8 percent could stand to pay anextra $5,00 over a 10 year repayment period bringing their total to$28,000. 

"That's crazy. Once you do that I don't know how you are goingto pay that off especially trying to find a job in our economy now,  says WinstonJohnson, a CSU freshman, says scholarships aren't enough, so he has to takemore loans out for the next school year.

"You know they raised the standards for hope so you trying tokeep that and maintain your grades and what not," Johnson said.  

"My best advice to students would be only taking out thoseloans you absolutely need to live your life while you go through school,"Lanoue said.  

Congress says it would cost the federal government nearly $6billion to extend the lower interest rate of 3.4 percent.

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