Student loan rate hike will impact Bay area students - WFLA News Channel 8

Student loan rate hike will impact Bay area students

Posted: Updated:
TAMPA, FL (WFLA) -

Gridlock in Washington could wind up costing Bay area college students a lot more money.

On Monday, interest rates are set to double on Stafford Loans from 3.4% to 6.8%.  Congress couldn't come to an agreement on how to solve the problem, instead leaving the capitol for the holiday break.

"It's unfortunate because over 50 percent of our student population does receive financial aid and I think it could have a really large impact on our students," said Ashley Carl, spokeswoman of Hillsborough Community College. "I think this has snuck up on a lot of people."

HCC processes nearly $100 million in aid per year for 47,000 students, Carl said.

Democrats have argued keeping interest on Stafford loans low is of importance, saying poor and middle class students need the help.  Republicans want to control spending, and proposed linking student loans to the financial markets, instead of letting Congress set federal lending rates.

The Congressional Research Service estimates students who borrow $19,000 over four years, the maximum amount, will have to pay an additional $3,834 in interest payments over 10 years if the rates double.

"A lot of [students] are afraid if the interest rate goes up, they're not going to be able to continue their studies," said Chris McDermott, Advisor to HCC's Student Government Association.  "They're trying to just pay for their books, make sure they have food, and get to and from class. When you tell them interest rates are going up - they say 'oh my God I can't even afford to go to school anymore because I'm already working full time and going to school and I can barely afford that'."

They also worry about whether they'll be able to make loan payments when they do get jobs.

"They're not necessarily worried about not being employed at all ... but they're definitely worried about underemployment," McDermott said.

The rate increase could impact more than 7 million students taking out future loans.

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