More than 18,000 Ohio University students will have higher Stafford loan interest rates if Congress doesn’t act by July 1.
The U.S. Department of Education oversees the Stafford loan program. The interest rate, currently at 3.4 percent, is set to automatically double to 6.8 percent next week.
OU students borrow more than $200 million a year in Stafford loans, said Valerie Miller, the university’s director of student financial aid and scholarships.
Congress is not expected to change the interest rates before the July 1 deadline because senators are focused on immigration legislation, according to the New York Times and Wall Street Journal.
If rates double, student borrowers, on average, would pay about $1,000 more in interest on the loans, according to White House estimates.
At OU, about 28,000 students receive some form of aid each year. Of those recipients, about 67 percent receive some level of Stafford loan, Miller said.
“The Stafford loan program has a benefit to students because of the repayment options and the options for forbearance and deference,” Miller said. “Your rights as a loan borrower are relatively broad.”
If a student receives a Stafford subsidized loan, interest doesn’t begin accruing until six months after a student leaves school.
Stafford unsubsidized loans accrue interest while students are in school.
The increased interest rate would be applied to both types of Stafford loans.
Typically, OU’s financial aid office recommends Stafford loans to students as a reliable way to pay for school, Miller said.
“The uncertainty of (the doubling loan rate) makes it difficult for families and students who are trying to make a sound financial decision have all the material to make that decision,” Miller said.
The government’s new interest rate would be go into effect on all loans taken out after July 1, 2013.
“The university has been in contact with congressional members and/or their staffers to urge them to find a bipartisan, long-term Stafford Loan solution,” said Eric Burchard, OU’s director of government relations, in an email via OU spokesperson Katie Quaranta.
Burchard, via Quaranta, declined an interview to discuss how OU is conveying this message to lawmakers.
OU President Roderick McDavis urged lawmakers to freeze the interest rate at OU’s Board of Trustees meeting on June 21.
“I hope reason and wisdom prevails and (Congress comes) together,” McDavis said. “There is no need for the interest rate to have to rise. We ought to be able to find some common ground on behalf of students across the U.S.”
dd195710@ohiou.edu
