Relief could finally be in sight for those who are taking out student loans this year. Congress is expected to reach a compromise on interest rates for subsidized Stafford loans this week, and President Obama has said he will sign it right away.
Though a deal is near, Fox59 News spoke to a local expert to answer some common questions that borrowers still have.
Craig Anderson is a student loan consultant with more than 20 years experience and the man behind CommonSenseStudentLoans.com, a website dedicated to the issue.
He says nobody should be waiting around for the compromise to be finalized in Washington.
“Right now, what I try to tell students is, they’re trying to get a loan interest rate compromise, so you should go forward with your student loans if that’s what you need to do,” Anderson said.
Though the interest rate debate impacts a lot of people, Anderson said many borrowers don’t realize that it only applies to students who have taken out subsidized Stafford and PLUS loans since July 1.
“So if you’re already in repayment this doesn’t impact you at all,” Anderson said. “Whatever rate you have is the rate you still have after this legislation is done.”
Although Congress did allow interest rates to double in July, Anderson says the compromise will effectively undo that increase.
“The good news is the new rates will be retroactive to July 1,” Anderson said, “so students who have already applied for the fall won’t pay the higher rate.”
Though the final compromise still needs to be worked out between the Senate and the House, it will likely lower the subsidized Stafford loan rate this year to about 3.9 percent. In coming years, the rate will be tied to the bond markets meaning it will likely rise, but it will be capped at 8.25 percent.
“So it is important to kind of pay attention to what’s going on with the rates, but you can take some safety in knowing it will never get higher than 8.25 (percent),” Anderson said.
No matter where the rates go, Anderson says borrowers need to have perspective.
“My biggest piece of advice is, don’t let some fear of student loan debt stop you from going to school,” Anderson said. “Be smart, borrow as little as you can and graduate on time so you borrow even less money.”
