Congress missed another deadline on Monday.
Student loan rates doubled, after Congress failed to extend a law keeping them at just over three-percent.
New loans will sport a rate just under seven-percent.
At the financial aid office, they’re focusing a lot of energy on dispelling myths and rumors.
For instance, current loans are not affected – only loans dispersed after July 1st of this year.
University of Alabama in Huntsville Financial Services Director Andrew Weaver explains, “On an average loan of $23,000 dollars principal, which is about normal for a student, it would mean about $3,000 dollars in additional repayments over the life of the loan.”
New students have a lot to do to get ready for the upcoming fall semester. Now figuring out finances may play a larger role in their prep routine.
Weaver adds federally subsidized loans are now almost as costly as private loans, even more expensive in some cases, though there are other benefits to them, “The difference is that with a federally subsidized student loan, there’s no interest charged while you’re in school. Once you leave school, the interest kicks in. With a federally unsubsidized student loan, interest accrues from the date of disbursement while you’re in school.”
Students who applied for these loans for the new year months ago saw the terms change.
So now they have a choice.
Weaver says, “If a student has accepted their loan for fall semester and decide based on the new rates that they don’t want to follow through with that, they can always cancel it prior to the beginning of the term.”
Of course, there’s also rumors that Congress could still lower student loan rates again to their previous level, but Weaver says he’s not advising students to bank on that.