College students who plan to finance their education through government-back student loans are about to pay more for their degrees.
On Monday, the interest rate on new subsidized Stafford loans jumped from 3.4% to 6.8%. The rate hike could increase the cost of a loan by about $1,000 for most students, the Washington Post notes.
The rate hike only applies to new student loans obtained after it went into affect. Loans taken out prior to Monday will retain the lower rate.
Congress could intervene and reduce the interest rate. However, the White House and congressional Republicans could not work out an agreement prior to the Independence Day recess. An earlier effort by Republicans in the House failed to garner Democrat support. A Democratic bill in the Senate to extend the lower rate for another year will be voted on later this month, but faces GOP opposition.
As many as seven million students will take out subsidized loans for college this fall.
The opinions contained in this column are solely those of the writer.
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