Student loan interest rates risk doubling this summer - News, Weather and Sports for Lincoln, NE; KLKNTV.com

Student loan interest rates risk doubling this summer

Posted: Updated:

By: Jenn Schanz
jschanz@klkntv.com

A deal that sets Stafford loan rates at 3.4 percent expires this summer.

If Washington can't agree on a solution by July 1, the rate will double to nearly 7 percent, costing students on average, an extra $1,000 a year.

Not surprisingly, they're concerned.


"To have this huge amount of debt looming over your head is kind of terrifying. Just to think you could be paying that off for 20 to 30 years of your life, it's scary. Very scary," says UNL senior Matt Vicars.

According to Fidelity, on average, across the country, students owe about $35,000 upon graduation.

At UNL that number is $21,000, but it's still a big chunk of change to those just entering the workforce.

UNL Money Management Director Erin Wirth says regardless of the likely increase, students can keep their heads above water.

"The best thing is just to practice good financial habits, budgeting, understanding the dangers of credit use, keeping debt as low as possible and just understanding how to be proactive about your financial future," she says.

In Washington D.C., Democrats are pushing for a temporary fix, keeping rates at 3.4 percent for another two years. Republicans, including Senators Mike Johanns and Deb fFischer want to switch to a market–based interest rate system.

Both ideas failed to get the 60 votes needed to advance.

Financial professional Brett Shunkwiler says despite the increase, taking on loan debt will still be worth it.

"Definitely still get your education. You know, it's a few more thousand dollars, but at the same point in time over the long run, studies show that you will make quite a bit more money than if you didn't get a degree."

 

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