The attempt to get a higher education may strike students harder in the next 2012-2013 year. The interest rates on student loans subsidized are expected to double to 6.8% on July 1, which would mean students taking out loans for the next school year will have to come up with more funds to pay them off. Many think Congress should step in and stop the increase from happening, but Congress appears to think there would be too much additional cost. Democrats in 2007 crafted the law to lower the interest rate from 6.8% to the 3.4% rate it is now, however, the law also included that the interest rates would return to the 6.8% in 2012. Congress wrote the law this way, because facts are, it would cost an additional $6 billion annually to keep the interest rate at 3.4%. But with the chance of increasing interest rates many families and students question how they will be able to pay back those loans. Subsidized Stafford loans are based on families/students with financial need and more than 7 million undergraduates have subsidized student loans. That being said, if Congress does nothing, students borrowing the maximum $23,000 in subsidized loans will add an extra $5,000 over a 10-year repayment period; money that families in financial crunches question on how to obtain. While Obama has pushed to expand access to college for low and middle-income families, lawmakers have taken several steps to chip away at student aid. Congress has already eliminated subsidized loans for graduate students, along with many discounts. They have also cut $8 billion out of the Pell Grant program for low-income students and have made it harder to obtain a full Pell Grant by reducing the income threshold. Student loan debt has been a rising issue, in which its debt has exceeded credit card and auto loan debt, putting it at an estimate of $1 trillion. What’s the best solution? It’s a tough question to answer, but with the rising debt and the increasing burden on taxpayers, some kind of change should be considered.
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