By Mike Dougherty
PHILADELPHIA (CBS) — Interest rates on subsidized federal students loans were set to double Monday because congress couldn’t come up with a last minute resolution.
A need-based, subsidized Stafford loan is now 6.8-percent, up from 3.4 percent — that means millions of college students paying their way though school, including Drexel senior Devon McMahon, could see up to $4,600 tacked on to their debt if nothing changes.
“Honestly, this is the first time I’m hearing of that,” McMahon said. “And it’s a little disappointing because you’re going to college to get an education, and I just feel like people make it so much harder to achieve that through loans.”
Her story is not uncommon. She’s taken out both federal and private loans to pay tuition and is waiting tables to make ends meet. The rate hike could add a significant burden to her monthly payment after graduation, something she feels is unnecessary.
“It’s a little disappointing,” McMahon said. “I think that to a certain extent, the government should take some sort of responsibility for helping.
Existing loans are unaffected.
There is still a chance congress could come up with a solution and the rate would likely be retroactively rolled back to July 1. There are a few proposals being discussed on Capitol Hill, including one from House Republicans and one from President Obama.