Federal student loan interest rates double as of July 1
SOUTH BEND, Ind. -- As of July 1, students taking out subsidized federal student loans are paying 6.8-percent interest because Congress failed to reach a deal on Friday to stop the increase.
"It will affect any student who borrows a new student loan beginning July 1and it only affects undergraduate students. Graduate students aren't eligible for subsidized student loans and the unsubsidized student loan interest rate is already at 6.8 percent,” said Cyndi Lang, Associate Director of Financial Aid and Scholarships at Indiana University South Bend.
Students taking out loans now are not happy.
"The problem is the law school, med school, engineering degrees, stuff like that, yeah that's fine. Let the government give out loans for that stuff and charge a high interest rate. What they're doing is giving out loans for social science degrees, worthless degrees, art degrees and students can't pay that back,” said student Nick Sheppardpatel.
Students usually pay those loans over a ten year period or a 25-year period.
“If a student has $10,000 in student loans at 6.8 percent compared to $10,000 at 3.4 percent, their repayment will be about $2,000 more over ten years,” said Lang.
Some undergrad students may turn to private loans if the federal interest rates don’t drop again.
There are concerns that students may decide to forego their education.
"I think if you really want it, you're going to still go for it and you're going to still pursue your education but when it comes time to pay it back, it will be a little bit harder,” said student Deshawn Guiden.
Student loans aren't the only way to pay for school. Lang suggests looking for scholarships and grants first – before turning to student loans.