By Pat Loeb
PHILADELPHIA (CBS) — It appears there will be no relief for college students who rely on federal loans to help pay tuition.
Interest rates doubled this month, and efforts to hold the rate down have failed in Congress (see related story). Meanwhile, students have few alternatives for making college affordable.
Two-thirds of college students depend on loans to get a higher education, graduating with an average of $26,000 in debt.
“It has a huge impact on their overall finances,” says Markita Morris-Louis, of Clarifi, a Delaware Valley consumer credit counseling service.
She says recent graduates are already using 60 percent of their income to pay off loans, and the new rate will add as much as $5,500 in additional interest to the overall burden.
But she says commercial loans are at least as expensive — and have more stringent repayment rules.
“With the federally subsidized loans, there are much greater options: consolidating those loans, deferment, or income-based repayment options. For those who have private loans, there’s very little that can be done,” she warns.
And Morris-Louis says with so few choices about how to afford college, families are increasingly considering whether it’s worth it to even attend.