There’s a ominous countdown clock ticking away for college students across the U.S. this year. When time runs out on July 1, 2012, student loan interest rates will double for almost 8 million students.
Students will end up paying a hefty $5,000 more on their student loans than they otherwise would.
In the past five years, the federal government has made unprecedented investments in student aid to help students afford colleges. One of those investments was the College Cost Reduction and Access Act of 2007. The new law gradually cut interest rates on subsidized Stafford loans, which account for almost half of all federal student loans. Subsidized Stafford loans are given to borrowers based on need, and are ‘subsidized’ because the federal government pays the interest on the loan while the student is enrolled. The interest rate on this loan was cut from a 6.8 percent fixed interest in 2007 to 3.4 percent fixed interest through the 2011-2012 academic year.
The Obama administration has pledged to keep these interest loans low, but the one question not a lot of people seem to asking is why is college so expensive in the first place?
Well Vice President Joe Biden, who apparently doesn’t now the definition of irony, has the answer.
A conundrum indeed.