As President Obama mentioned in his State of the Union address on Tuesday night, the interest rates on student loans are set to double this summer unless Congress takes action to keep rates at their current level.
This means, for example, that the Stafford loan you signed for last year was at 3.4%; the one you sign for this year will be at 6.8%. Let's imagine that last year (2011-2012), you took out a $10,000 loan at 3.4%. And this year (2012-2103), you take out another loan -- but this time at 6.8%. Here's the difference:
- $10,000, repaid over 10 years, at 3.4% interest = $11,810 total loan amount = $1,810 in interest
- $10,000, repaid over 10 years, at 6.8% interest = $13,809 total loan amount = $3,809 in interest
So ... what are your options if the interest rates go back up? Well, first and foremost, make sure you know the 5 basics of your financial aid package. After that, make sure you're informed about what exactly you're signing when it comes to your award letter. And lastly, make sure you know the email address of your local Congressperson so you can contact them about how important it is to keep interest rates where they are!
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