By Pat Loeb
PHILADELPHIA (CBS) – Subsidized student loan rates will double next week, unless Congress acts to extend legislation that reduced the rate.
The rates were gradually lowered as part of the College Cost Reduction Act of 2007, but that bill is set to expire and Congress is at loggerheads over extending the interest rate cap.
An increase would impact some 7,000,000 college students who borrow so they can afford to go to college. However; Sharon Pepe, of Penn’s financial aid office, says it isn’t likely to discourage college attendance or borrowing.
“Although no one likes to see an interest rate for students increase, I’m not sure it’s going to have the effect that people are expecting it to have.”
Pepe adds that the higher rate would raise student debt by a maximum of $5,000. With 10 years to repay the debt, monthly payments would increase by about $40.
Still, Barbara Mattleman, of Philly Goes 2 College, which is the city’s effort to encourage attendance, says the brunt would be borne by low-income students, who borrow the most.
“In Philadelphia, where we have such a high rate of poverty, it’s an even greater obstacle for students to go to college and get their degree.”