Just in time. Today Congress finally approved extending the 3.4 percent interest rate on subsidized Stafford loans for another year. It took a lot of negotiation to make this happen, but it’s ultimately a pretty limited fix. As Annamaria Andriotis over at the Wall Street Journal explains:
A last-minute deal by Congress on Friday to prevent interest rates on student loans from doubling received a surprisingly lukewarm reception from some consumer advocates.
Rates on subsidized Stafford loans, which were scheduled to jump to 6.8% on July 1, will remain at 3.4% for undergraduates for the coming academic year.
The freeze means some borrowers will save thousands of dollars over the life of their loan, but those who take out loans after the year is up will miss out, unless Congress acts again. The deal excludes graduate students.
Right. We have to do this all over again next year. The bill came as part of a package that included transportation funding, tobacco taxes, and flood insurance.
The bill may save students “thousands of dollars over the life of their loan” but, because the 3.4 percent interest rate applies only to subsidized Stafford loans issued last year, doubling that interest rate, and charging 6.8 percent for loans for next year, would have only cost students, at most, an extra $9 a month. The average is more like $6.