Leaders in both political parties insist that they want to find a way to prevent subsidised Stafford loan rates from jumping from 3.4% to 6.8% next month, but they’ve been unable to agree on how to pay for the US$6 billion cost of extending the lowered rates for another year.
Industry professionals fear the hike could be a disincentive to study abroad. “I think study abroad professionals are concerned that the interest rate could be a tipping-point issue for some students who may be considering study abroad, who would need student loans to make it happen, but may shy away from it because of the increase in the interest rate,” said Ursula Oaks, spokesperson for NAFSA.
“Of course we have no good way to measure this and probably won’t know for sure about the impact for some time.”
US college debt has exceeded US$1 trillion and surpassed total credit-card debt in the country
In 2007, 150,000 Americans were enrolled in undergraduate and graduate programmes abroad. Forty countries were responsible for those students, managing $255,630,442 in federal education loans. In 2010 the number of American students who studied abroad increased to a new high of 270, 604.
Stafford Loans are given regardless of a student’s credit history and don’t require repayment during the time of study. The 6.8% interest rate would only apply to new recipients of the loan for 2012-2013. Figures show that 7 million students, studying domestically and abroad, stand to be affected.
Speaking at the University of Nevada at Las Vegas last weekend, President Obama urged congress to make a decision. “How many people can afford to pay an extra $1,000 when you’re a student, just because Congress can’t get its act together? … This is a no-brainer. . . . Get it done.”
US college debt has exceeded US$1 trillion and surpassed total credit-card debt in the country, making it a polemic issue.