Congress Considers Doubling Student Loan Interest Rate

Congress Considers Doubling Student Loan Interest Rate

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Summer school is underway on the campus of the University of South Alabama. For 56 year old Carol Williams, this marks her second semester in college.

"I got married and had my daughter. Now I'm divorced and I just decided I wanted to come and get by teaching degree," said Williams.

But her excitement is met with concern. Congress will soon vote on doubling the interest rate for subsidized student loans from 3.4 percent to 6.8 percent. On top of that, the university is raising tuition by 4.5 percent.

"I do value my education, and everything else is going up and so it's just something that you really know you have to deal with," said Williams.

"It took me 8 years to finish college, so I ended up with 25 thousand in debt," said Carly Dougherty.

Dougherty is 2nd year grad student, and has a plan to have her loans paid off in 7 years. "I found a financial guy who say down with me he told me how I can kinda snowball my debt," she said.

Having a plan to pay off your student loan debt, before you start college should be your goal.

Financial advisor Ronald Blanks says the future of student loan debt in American doesn't look promising.

"It's already a crisis as we speak. The default rate is out of control. So a lot of students are struggling to pay their student loans. So I don't see where this is going to get any better unfortunately. The higher education program is actually designed to subsidized the higher education, not profit from it, and unfortunately greed is taking it toll," said Blanks with Collegiate Financial Services.

He says default rates can go as high as an additional 13 percent. For many students, that thought is overwhelming.

"It kinda hinders graduating. And you are like I don't have a job yet, so let me go into grad school and I know my sister went to private college and had to pay hers off in 15 years. So it's like is it worth it? That's what I feel like people are going to start asking if they start raising the rates," said Dougherty.

Right now the U.S. Senate is discussing a possible compromise on doubling the student loan interest rates that could help students dodge an extra $1,000 each year in loan cost. Financial advisor Ronald Blanks has tips on what parents and students need to consider when applying for student loans. Click here for the website.

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