Saving Money Blog

Finance Blogs » Saving Money » Double double, college loan trouble

Double double, college loan trouble

By Jessica Patel · Bankrate.com
Thursday, June 21, 2012
Posted: 5 pm ET

Aaah, technology, when you need it -- it breaks.

President Barack Obama urged Congress to act Thursday afternoon to keep interest rates on some federal student loans from jumping. His 20-minute speech was supposed to be followed online by a live Twitter chat to answer all our questions on the impending "rate hike," but alas, the site crashed. So while we missed out on that, let's catch you up to speed on today's press conference and how it affects all of us paying back all that paper that helped us get paper.

As it stands, next month federal Stafford subsidized rates are set to double, from 3.4 percent to 6.8 percent. According to Obama, that's the equivalent of a $1,000 tax hike on more than 7 million people. I don't know about you, but that's not chump change. Today the president said: "The average student who borrows to pay for college now graduates owing about $26,000 in their student loans."

Using that example, while it doesn't seem that bad when you are paying $50 more a month, by the end of the loan, you would have paid about $5,200 in interest -- not including any late payments or forbearance periods you may have racked up along the way. If you are one of those recent grads who's having a hard time finding a job -- that's a ton of cash.

The rate is expected to jump because the College Cost Reduction and Access Act of 2007 reduced the rate through this year, and now it's set to expire. Republicans and Democrats agree that they don't want it to expire, but what they can't agree on is how to pay for it.

In a nutshell, Obama is asking Congress Rodney King-style (R.I.P.) -- "Can't we all just get along" -- and work together to get this solved.

Do you think we should extend the low loan rate? What is the best way to do it without incurring more debt? Tell us!

Or follow me @jmappellejpatel

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.