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Student loan rates set to double
LATHAM -- New student interest rates will double next week if Congress doesn’t take action. Last year, Congress extended a bill to keep rates at 3.4 percent, but it expires on July 1.
“It's a big issue given that you have to qualify on a financial needs basis for these subsidized loans and it's going to affect those who need it the most,” said Dennis Fagan with Fagan Associates. “We need something longer term, but I think you're looking another year extension. That's the way the government is acting now. If you look at sequestration, if you look at a lot of stop gap measures to deal with debt issue, I don't see a longer term solution.”
Congress still has a week to come up with a solution, but experts warned it is likely any deal will result in loan seekers paying more money.
“A lot of it is the government is looking at interest rates. Our federal government needs more money and they're looking at different funding sources and student loans are low and they'll look to see what can we afford to do, just like we do at home,” said Susan Siegel with Sunmark Federal Credit Union.
Any increase in rates could be a double hit for students already facing higher tuition bills. Often federal loans don’t pay for a student’s entire education, which forces them to look elsewhere.
“Here at Sunmark we are seeing growing demand for private student loans because funding sources have diminished,” said Siegel. “So shop around and definitely look at options.”