Local Students React to Student Loan Rate Decision
COLUMBIA - Some college students in Columbia can feel relief after the U.S. congress decided to not double Stafford student loan rates.
Congress made the decision Sunday. But that relief is only temporary as long term questions about the program were debated and many students realize the decision is only temporary. Next July, interest rates on those loans could double again and several other factors about the program will be decided.
Current interest rates on federal student loans are at 3.4% and would have doubled to 6.8% on Sunday if lawmakers didn't take action. The U.S. congress made another change by voting to change the grace period. Instead of an interest-free grace period of six months, interest would accrue upon graduation. However, students still get a six-month period after graduation where they don't have to make any payments.
The U.S. Congress is evaluating the program because it is in debt and more students in the history of the program need help paying for school. Rising tuition rates, the economy and higher volumes of students are blamed for the higher demand. Higher interest rates would bring in more money, but at the expense of students.
University of Missouri-Columbia graduate Brian Osario believes that even if student loan interest rates doubled it would not be a big deal.
"Interest rates would still be less than a private loan. And even if interest kicks in at graduation, it might motivate people to begin paying them," says Osario.
However, Columbia College student Sarah Foley believes education should be kept as affordable as possible.
"I have already taken out $40,000 in debt. I will probably have to take out another $17,000 to pay for my education, the maximum amount for the program. I do not need to spend more money on my school," says Foley.
Foley actually changed her major from forensics to nursing because of her job outlook upon graduation. She thinks doubling the interest rates would make her pay an additional $10,000.
"There are so many other things I would rather use that money for. I would rather use that money to further my photography business or donate to Christian ministry," says Foley.
For more information about the program, you can visit the Direct Federal Loans website here. It outlines changes and proposed changes to the program.