Past due student loan balance by age. Q3, 2011.

Student Advocates Raise Concerns over Pending Student Loan Interest Rate Increase

Student advocates worry that a pending interest rate increase on federally-administered student loans will further burden borrowers, potentially adding thousands of dollars to the cost of financing a college degree. Student loan interest rates are set to increase from the current rate of 3.4 percent to 6.8 percent for loans made after June 30. Rates have been at an artificially low 3.4 percent since Congress pasted the College Cost Reduction and Access Act of 2007, a plan to improve educational access by incrementally reducing rates over a four-year period. The rates will jump back to 6.8 percent July 1 if Congress fails to extend the bill, the New York Times reported. Students rallied at the nation’s Capitol last week to protest the increase in subsidized loans, generally made to low- and medium- income undergraduate students through the federal Stafford program, the Associated Press reported.