If you are planning to take out student loans for college in the near future, then you may want to keep the borrowing at a minimum.
That’s because we might see the current interest rates for federal loans for low and middle-income families to double from 3.4% to 6.8%.
This could mean that a student who takes out $23,000 could end up paying a whopping $11,000 in financing costs over the next 20 years. This doubling of interest rates is not limited to just a handful of the well-to-do kids as well. As many as 8 million students could end up having to fork twice the interest payments.
The truth of the matter is that the 6.8% interest rate is the original interest rates of federal loans. Nobody paid much attention to the interest as money was good and plenty of folks had decent jobs. Then the recession came around and knocked everyone out of the good times.
The government shaved off the interest rates on student loans to help ease our financial burden, although this was supposed to be a temporary measure until the economy got back on track churning jobs and money for us all.
That has not yet fully happened yet, but some are already pushing Congress to get interest rates back to 6.8% at a time when tuition fees are spiraling out of control.
The interest rate rollback is not set in stone just yet, but we still have to keep a sharp eye out on what Congress will decide in the near future. If it decides to keep interest rates as they are, then we will continue to enjoy lower rates until jobs become plentiful and well-paying again. If Congress decides to roll back the interest rates, then we are all going to have to tighten our belts and deal with yet another weight around our necks.