Student Loans: Government Walloping Americans With Rate Increases

Students and parents across the country are learning the hard way: in the Bush administration's America, college loans don't come cheap:

"It's going to be harder for kids to repay their tuition now," said Dr. Jeff Diamond, director of guidance at Fauquier High School. "But a lot of them don't have much of a choice, because most students don't have $50,000 to $100,000 to get them through school."

Last month, the fixed rates for Stafford loans for enrolled students (or those in the six-month post-graduate grace period prior to beginning repayment) rose from 4.7 percent to 6.54. Rates for Stafford loans already in repayment increased from 5.3 percent to 7.14, and PLUS loans interest rates climbed from 6.1 percent to 7.94.

New Stafford loans issued on or after July 1 now carry a fixed rate of 6.8 percent; PLUS loans are being offered at 8.5 percent.

Often times, after a student's graduation, he or his parents will choose to consolidate whatever college-related loans he or she holds-to combine them all under a single, fixed-rate loan. With the new system, the federal government is encouraging all loan holders, graduated or otherwise, to consolidate before June 30.

Those loans that were not consolidated at the end of the month now have a new 7.13 variable interest rate. Last year at this time, that same rate had dipped to almost 3 percent.

"It's possible the new rates could prohibit someone from attending college," said Diamond. "These kinds of changes make an impact on students' choices."

"It's possible the new rates could prohibit someone from attending college." Does no one in leadership at Congress or the White House see a problem with that?

Posted by Americans United For Change Web Team