Paying for college is tough enough, but have you heard about the recent hikes in interest rates for student loans? Read on to find out how this affects you as either a current student or someone in repayment, plus how government officials plan to resolve the issue of crippling student debt.
As of yesterday, Stafford Loan interest rates doubled from 3.4% to 6.8%. Congress did not pass an alternative measure before the July 4th break, which will end at 2:00pm on Monday, July 8th. However, it still has the option to pass a measure that will retroactively affect the rise in interest rates, altering the Stafford Loan rates for this year’s students and perhaps others. This article will outline a few of the options Congress faces, what changes may be made, and how those changes might affect students with Stafford Loans.
What is a Stafford Loan and how does it work?
Stafford Loans are the most common kind of federal student loans available. They are available to students at accredited institutions
in the United States, a category to which most colleges and universities in the United States pertain. Stafford Loans can be either subsidized or unsubsidized. Of these, subsidized loans tend to have lower interest rates, and the federal government pays the interest that the loans accrue. Contrastingly, the interest that accumulates on unsubsidized Stafford Loans is capitalized, meaning that it is added to the part of the loan on which interest is paid.
Subsidized Stafford Loans are available to those who demonstrate financial need via the Free Application for Federal Student Aid (FAFSA) form, which must be renewed each year a student wishes to apply. Unsubsidized Stafford Loans are available to all students who meet the Stafford Loan requirements, which can be found here.
In addition to Stafford Loans, the government gives out PLUS Loans, which are unsubsidized loans and in the past have had higher interest rates than Stafford Loans. PLUS Loans are available to graduate students and parents of students.
The Option Proposed by President Obama:
Private schools, well-known for their tolerance of the off-beat, surely welcomed Kari Smith’s son into their fold (sarcasm). In 2005, unable to afford the pricey tuition, Kari did what…well, almost no one, I had hoped… would do. She offered her forehead as advertising space online and soon had a taker, the virtual casino “Golden Palace.com.”
Like me, you may have hoped that this was a random act of desperation but alas, it was just the beginning. While mobile marketing like wrapped cars are a frequent sight, they just aren’t able to get into tight spaces, like Wal-marts. Did I mention Ms. Smith collected a cool $10,000? That fact motivated dozens of other people to go under the tattoo gun. If you think this sounds like a dandy idea, check out http://leaseyourbody.com. The website promises you will get “novel attention.” And for those of us who are writers, any attention, especially the “novel” kind, gives us pause.