Student Loan Rates Double Without Congress' Action - KTVN Channel 2 - Reno Tahoe News Weather, Video -

Student Loan Rates Double Without Congress' Action

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Interest rates on some new federally backed loans for college students are now double what they were last week.
 
Subsidized Stafford loan interest rates went to 6.8% on Monday because Congress didn't strike a deal to keep them low. That translates to an extra $2,600 per student in costs. It affects roughly a quarter of all federal borrowers.
 
The effects aren't immediate, though. That's because most students sign their loan documents when they return to campus in the fall.
 
Lawmakers say they can return the interest rates to 3.4% when they return after the July 4 holiday.
 
The Republican-led House passed a bill before leaving town that linked student loan interest rates to the financial markets. The Democratic-led Senate, however, was unable to overcome a procedural hurdle. "People in their 20's are putting off home purchases, are not doing what their parents' generations did because they have so much debt," says Sen. Jack Reed (D) R.I.

The increase does not apply to existing loans, only to new ones affecting about 7.5 million borrowers. "That's bad news for us students because we're going to be in a bad situation when we get out," says Fordham University student Troy Krusz.

(The Associated Press also contributed to this report.)

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