Interest rates on student loans will rise again tomorrow and it appears that most news outlets are downplaying its impact on college students. But at least one guest on Yahoo’s “The Daily Ticker” was willing to speak up Monday.
As a result of congressional action last year, interest rates on undergraduate Stafford loans taken out between July 1 and June 30, 2015 will jump up to 4.66 percent. Last year’s rate was 3.86 percent. This increase is for both subsidized and unsubsidized loans.
The interest rate on unsubsidized Stafford loans for graduate students will be 6.21 percent, up from last year’s 5.41 percent. Rates on direct PLUS loans, offered both to parents of college students and to graduate students, will rise to 7.21 percent. Last year’s rate was 6.41 percent.
None of these increased rates apply to loans given out in previous years.
On “The Daily Ticker” Monday, host Aaron Task brought up an estimate from Bloomberg News that states the rate increase amounts to about $46 more per payment on a $10,000 loan paid out over 10 years. In light of this statistic, he asked Jen Wang, policy and advocacy manager at Young Invincibles, why this increase would even be a “big deal.”
Wang shot back.
“It’s a big deal because we’ve got a $1.2 trillion student debt crisis in this country,” Wang said. “One in three young people who graduate from college this year moved back home with their parents. We’ve got young people not buying homes, not buying cars. It seems like the trends we’ve been seeing in our economy are really changing because of our student debt.”
Last year Congress passed legislation tying federal student loan rates to bond yields on 10-year Treasury notes, with direct loan rates resetting every year on July 1. All estimations show these rates increasing annually as a result.
These rates also impact an ever-growing number of people in the U.S. About 70% of college seniors had student loan debt in 2012 and the average student loan debt for a 2012 graduate was about $30,000, according to a study by the Institute for College Access and Success.
You can watch the full interview with Wang here.
