Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Georgetown University’s Newspaper of Record since 1920

The Hoya

Student Loan Interest Rates Double

Interest rates on federally subsidized student loans doubled from 3.4 percent to 6.8 percent Monday after Congress failed to come to an agreement before the July 1 deadline.

The increased rate for subsidized Stafford loans, available to undergraduates with demonstrated financial need, came after  a one-year extension of current rates expired.

The new rate will apply to loans granted after July 1, including those extended as part of financial aid packages for the 2013-2014 academic year. Congress could still come to an agreement after the Fourth of July recess in which case loans extended at the 6.8 percent rate could be retroactively lowered to the rate specified in any new agreement.

“I would say that there is more than a 50-50 chance that this can still get worked out,” Georgetown’s Associate Vice President for Federal Relations Scott Fleming said. “There are still conversations continuing on the Hill and the timing of the current Congressional district work period is opportune,” he added, referencing pressure congressmen are likely to encounter from constituents over the federal holiday.

The Obama administration estimated that the rate increase will cost the average student about $1,000 a year. Students whose financial aid packages for the coming year have already been set are most vulnerable to the increase.

“Financial aid packages for the upcoming school year have been made and whatever the interest rate will be, will be,” Fleming said. “The university will probably not be able to go back and reexamine them all.”

While more than 43 percent of Georgetown students receive direct loans in their financial aid packages, Fleming emphasized that the university tries to limit students’ reliance on Stafford loans. The average Georgetown student in the Class of 2012 had $12,000 in federal subsidized loans, compared to a national average of around $25,000.

“If we’re doing that, Congress should be able to come together to figure this out,” Fleming said.

The Georgetown University Student Association led an advocacy campaign against rising student loan interest rates throughout June, delivering letters to Congressional offices and encouraging students to call their representatives to protest rate increases. Though the deadline has passed, GUSA will continue to collect signatures on its petition and contact legislators.

“[The outcome] was disappointing, but not surprising. Both parties are tempted by the idea of defeating the other instead of focusing on the issue,” GUSA President Nate Tisa (SFS ’14) said. “I’m confident going forward that some sort of compromise will be reached. It would be irresponsible and outrageous to leave loans at the doubled rate in the long term.”

Hoya Staff Writer Evan Hollander contributed reporting. 

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