Updated: Student loan interest rates double after Congress misses deadline

Patrick Svitek, Summer Editor

The interest rate on new subsidized Stafford loans doubled Monday, potentially affecting hundreds of Northwestern students looking for financial aid this fall.

The rate increased from 3.4 to 6.8 percent after Congress failed to avert the scheduled hike and adjourned Thursday for its Fourth of July recess.

In the 2012-13 academic year, more than 2,500 undergraduate students at NU were on the loans, said Carolyn Lindley, University director of financial aid.

“Since government subsidizes these loans, the impact will be felt when the student goes into repayment,” Lindley wrote in an email to The Daily. “A subsidized loan means that the interest is paid by the Department of Education while the student is enrolled at least half time.”

Associated Student Government president Ani Ajith joined more than 100 other student leaders from across the country to sign a petition urging lawmakers to take action last month. Ajith, a rising Weinberg senior, said Sunday it is “frankly ridiculous” Congress could not coalesce around an issue that “cuts across party lines.”

“The fact of the matter is we are already saddling the future generation of this country with insurmountable student debt, and this will not help that,” Ajith said.

(ASG-backed petition on student loans to be delivered to Congress)

It remains unclear whether Congress will find some way to restore the old rate when it returns next week. Confronted with the same deadline last summer, President Barack Obama and then-White House hopeful Mitt Romney backed a one-year extension with the youth vote in mind.

This year’s showdown centered on whether to put off the rate increase for another year and how to pay for it. On May 23, House Republicans passed a bill that would make the rates dependent upon the 10-year Treasury note.

House Democrats balked at the GOP proposal, criticizing it for tying the rate to unpredictable market forces. Rep. Jan Schakowsky called it the “Making College More Expensive Act.”

“Millions of students rely on student loans to make a college education affordable and they can’t afford the burden of increased interest costs,” the Evanston Democrat said in a statement. “Our students need access to more affordable student loans rather than increased student loan interest rates.”

Ajith said the issue will be part of “ongoing conversations” about financial aid when ASG returns in the fall.

“The fight is not over,” he added.

Summer editor Patrick Svitek can be reached at [email protected] Follow him on Twitter at http://www.twitter.com/PatrickSvitek.