Student loan deadline approaching before interest rates double - WQOW TV: Eau Claire, WI NEWS18 News, Weather, and Sports

Student loan deadline approaching before interest rates double

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Menomonie (WQOW)- Student loan debt has already surpassed credit card debt nationwide.  That problem could worsen unless Washington acts soon.

"This is something that needs to be tackled and it is essential in terms of the health of the middle class," states U.S. Senator Tammy Baldwin.

College students may be out for summer, but they still may need to get out their calculators if Washington can't come up with a solution.

If lawmakers fail to reach an agreement by July 1st, student loans subsidized by the federal government would increase from 3.4 percent to 6.8 percent; which means you'll have more money to pay off.

"About 40 to 45 percent of UW-Stout students do have a subsidized loan," points out UW-Stout Financial Aid Director Beth Boisen.  "Let's say a student borrows $23,000 in subsidized loan over the period of education here at UW-Stout, what this increase would do would basically add $5,000 onto their interest payments."

Baldwin says more grant money is one option.  Another is implementing a bill called "Know before you owe."

"There are some colleges out there who are recruiting people for programs that aren't very marketable; degrees that aren't going to help them land a job, and charging them through the nose in order to participate," Baldwin says.

"Realistically look at what you would make your first year out of college.  You should really never borrow more than that amount," recommends Boisen.

One thing is for sure.  Students will be watching Washington to see if anything happens before that July deadline.

"I am cautiously optimistic that we'll be able to come up with a solution," Baldwin hopes.  "Right now, the Senate and House are taking different approaches, but I think both Houses agree that this is a really important objective that we share."

The interest rate hike would be applied to any new loan taken out after July 1st.  If lawmakers fail to strike a deal, it would not apply to any existing loan.

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