Washington lawmakers have known for months about the July 1st deadline to revamp the interest rate of federal student loans but they couldn’t agree on a plan.
On Monday the interest rate for new loans will spike from 3.4% to 6.8%.
Caught in the political crossfire are students like TCU’S Kezhal Shah-Hosseini and UNT’S Shardae Neal. Both are Nightcap interns and both are deep in debt.
Kezhal to the tune of $300,000.00.
“I have four different loans with them,” Kezhal said. “I think one or two of them are federal loans and the rest are TCU loans.”
Shardae’s loan debt is a bit less.
“I’m going to be graduating with $50,000.00 in student loans,” Shardae said.
Any new loans will come with an interest rate of 6.8%. Students with $27,000.00 in loan debt would pay roughly $1,000.00 for each year of school.
That may not sound like much–but with high unemployment and traditionally low wages right out of school it’s another drain on the fragile economy.
Financial strategist Clark Hodges said the pain will be temporary–in Congress deadlines come and go and then come back.
“They’ll be able to go in next month and retroactively put if off a year or something like that,” Clark said. “Politics as usual.”
Student debt in the U.S. is now more than 1$ trillion dollars. Several proposals by both parties went nowhere and now lawmakers won’t return to work until after their July 4th recess.
Future students may soon look back at 3.4% as the good old days as they enter the school of hard financial knocks.
Hodges said not to worry–it’s lawmakers who have too much to lose and expects them to kick the can down the road and extend the current interest rate.
“I can’t imagine saving face with any young person who voted for them if they are going to let this happen,” Clark said. “Even if it comes and goes by July 1st and there is no resolution it will get solved.”