A last-minute deal by Congress on Friday to prevent interest rates on student loans from doubling received a surprisingly lukewarm reception from some consumer advocates.
Rates on subsidized Stafford loans, which were scheduled to jump to 6.8% on July 1, will remain at 3.4% for undergraduates for the coming academic year.
The freeze means some borrowers will save thousands of dollars over the life of their loan, but those who take out loans after the year is up will miss out, unless Congress acts again. The deal excludes graduate students.
“It’s not the perfect solution, but it’s a step in the right direction, and it buys us time to find a longer-term solution,” says Rich Williams, higher-education advocate at the U.S. Public Interest Research Group, a nonprofit based in Washington.
Congress’s move will benefit undergraduate borrowers who enroll in college this fall. Freshmen who borrow the maximum $3,500 for the year in subsidized Stafford loans will typically save $700 to $1,719 over the life of the loan, depending on how they repay the loan, says Mark Kantrowitz, publisher of FinAid.org, a student-loan tracker.
Read more at The Wall Street Journal.
