WASHINGTON — College students taking out new loans for the fall term will see interest rates twice what they were in the spring — unless Congress fulfills its pledge to restore lower rates when it returns after the July 4 holiday.
Subsidized Stafford loans, which account for roughly a quarter of all direct federal borrowing, went from 3.4 percent interest to 6.8 percent interest on Monday. Congress' Joint Economic Committee estimated the cost passed to students would be about $2,600.
"It's kind of surprising; that's a big jump," said Rebecca Ehlers, an Iowa State University senior majoring in math.
A $1,000 subsidized Stafford loan is part of her financial aid package and she said she's reconsidering how she pays for school.
"I may work more or ask my parents for money rather than going through all that," said Ehlers, 21.
She — and millions of others who use federal student loans to pay for their education — has some time before she has to make that decision. But not much.
"The only silver lining is that relatively few borrowers take out student loans in July and early August. You really can't take out student loans more than 10 days before the term starts," said Terry Hartle, a top official with colleges' lobbying operation at the American Council on Education.
But that is little consolation for students looking at unexpected costs waiting for them on graduation day if Congress doesn't take action before it breaks again for the month of August.
"I'm upset by it," said Kolton Gustafson, a George Washington University political science major whose coming senior year will pack twice the interest as his junior year. "I wish there was a larger reaction to it."
"Many students are saying and thinking, 'I'll pay it later,'" the Grand Junction, Colo., native added. "That's why you don't see more people fighting back."