Unless there's an urgent need to attend a summer session, college students would be wise to hold off on taking out student loans; at least, long enough to see how Congress is going to carry this. Interest rates on the new subsidized Stafford loans doubled on Monday from 3.4 percent to 6.8 percent after Congress failed to intervene before the July 4 recess.
That makes borrowing a very precarious situation until Congress returns next week and possibly reconsiders. While this won't impact existing loans, monthly payments for students who take out loans at this point could be up to 17 percent higher than their contemporaries, according to the college planning collective known as the Edvisors Network.
Lawmakers could choose to temporarily extend the 3.4 percent interest rate, or implement a lower interest one for another year or several years.
The larger point here is that it's getting more difficult for students to complete college with all of these hurdles. It's especially impacting African-American students, as reports have shown high debt levels are more prevalent among black bachelor's degree recipients than among those from other racial/ethnic groups.
This has been an issue for students the past two years now. President Obama spent part of his campaign trail in 2012 on college campuses urging students to let Congress hear them. We saw in the Texas abortion debate what happens when people show up in the masses to get the point across. It could take that kind of effort to keep interest rates at a reasonable clip.