NORTH CAROLINA – On July 1, by Congress not making a decision to renew subsidies on federal student loans, they once again increased them from 3.4 percent to 6.8.
According to a report from NPR, the efforts to keep the rates from doubling on Subsidized Stafford loans—which account for roughly a quarter of all direct federal borrowing—fell apart amid partisan disagreement in the Senate before the July 4th holiday.
The change only affects new loans, not loans existing prior to the decision. Whether or not this change will be effective this coming school year is unclear; Congress could reconvene and take action on restoring the previous rates before it breaks again for the month of August.
Assistant Director for Financial Aid at UNC, Kristin Anthony, weighs in on how the change might affect UNC students. While she is unhappy about the increase, she says the average student loan debt at UNC is already extremely low compared to the national average.
“The nationwide average of loan debt from a graduating senior ranges somewhere between $24- and $25,000, but here at Carolina, ours has always been roughly around $15,000,” says Anthony.
Anthony says she’s hopeful that Congress will soon work on legislation that would bring the interest rates down to the previous level, particularly before the coming school year in August.
The good news is that even though there are loans being made currently that are at the 6.8 percent interest rate, if in the near future Congress takes action to restore previous rates, the lower rates will be implemented on all loans made since July 1.
“We do have documentation that has come from the federal government that has indicated that whatever they do decide in the near future, that they will backdate it to July 1, 2013,” says Anthony.
As far as possibly affecting enrollment at UNC, Anthony says she’s confident the change won’t make a difference.
“I think that students may just take a greater interest in keeping their loans lower—instead of borrowing the maximum amounts they’re allowed to borrow, they may start to look at, ‘what do I actually need versus what do I want to take?’”
“I think Carolina still stays very attractive to students, especially with our cumulative debt for graduating seniors, versus others schools that they may compare that number to,” she says.