Current Issues Affecting Your Money
Student Loan Changes - July 2013
The political debate about student loans has been a public one, but what changes will be made and how will they affect you? Here’s what you need to know about the recent rate increase and what’s to come.
First, the July 1, 2013 rate increase only applies to new, Stafford subsidized loans:
However, if you’re part of the group of individuals who plan to take out new, subsidized loans this fall, you may pay higher interest when your loans come due than you would have. In fact, you may pay twice the previous rate, which was 3.4% and is now 6.8%, however it’s possible you may not be paying the 6.8% rate because the rate may change again.
In fact, the interest rate change that took effect on July 1 was not the result of action, but rather inaction. The time ran out for Congress to make a decision, and this rate increase was the automatic result. It’s possible that one of the many plans proposed to address this issue will come to fruition before the start of the fall semester, if Congress decided to act.
Importantly, the plans being considered by Congress include more than just the recently increased subsidized loan rate. Congress is also considering making changes to other types of new loans as well as consolidation loans, and both fixed and variable rate plans are being considered.
Keeping an eye on student loan changes is critical for anyone who has, or will have student loans, because what Congress will decide is unknown but their actions have potentially far-reaching consequences.
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