Student loan interest rates doubled Monday as a result of an impasse in Washington, leaving college students waiting for action on the rates when Congress returns from its July 4th holiday.
Interest rates on subsidized Stafford loans increased from 3.4 percent to 6.8 percent on July 1 after Congress was unable to extend the lower rates. UT officials say this increase will increase the average student’s debt by almost $2,600. Both sides of Congress have pledged to resolve the issue before the fall, when most students begin taking out their loans.
Republicans have proposed linking student loans to financial markets instead of letting the federal lending rates be set by congress. President Barack Obama and other Democrats have resisted that approach and insisted on other long-term solutions.
According to state data, 85 percent of student aid in Texas comes from federal loans, which is 9 percent above the national average. The state currently ranks second in the number of students who take out federally subsidized loans.