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Student Loan Rates Double…Time to Celebrate?


Student loans interest rates just doubled this morning, as Congress left for recess after failing to reach a deal by the July 1 deadline. College students will now be forced to pay the government an additional $2,600 on average.

There’s still a chance that lawmakers could pass a bill that would apply retroactively, saving students from this increase. Fox News reports:

Democrats said the Senate would consider voting on a one-year extension of the current interest rates July 10, after a recess for the 4th of July holiday. But Massachusetts Senator Elizabeth Warren said that the party preferred to include a comprehensive student loan measure in a long-range law governing colleges and universities.

Students (and parents) shouldn’t get their hopes up. It’s been hard to get anything through Congress lately. It’s not clear why student loans should be any different.

Fortunately, it may not be such a bad thing if Congress never acts. Easy access to student loans has been a chief culprit fueling the long-term rise of college costs. A higher interest rate might dissuade new students from taking on debt, finally forcing universities to reduce their costs. For once, there may be an upside to congressional ineptitude.

[Ball and chain image courtesy of Shutterstock]

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