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Student loan interest rates double to 6.8 percent

July 1, 2013 12:00:00 AM PDT
Beginning Monday, it becomes a lot more expensive for students to borrow money for their college education. The interest rate doubled on Monday because Congress failed to act on a federal student loan measure.

The interest rate has doubled from 3.4 percent to 6.8 percent.

According to the federal government's Department Of Education student loan program: For loans totaling $10,000, if you were to pay that off in 10 years at 3.4 percent, the cost is $11,810.17. The same $10,000 loan at 6.8 percent over 10 years, you'd pay $13,809.64.

Some students say the higher rate is adding to the stress of how to pay off their student loans after they're done with school.

In 2008, Congress started lowering the interest rate, which was 6.8 percent, on what it called subsidized loans to make it more affordable for lower-income students to pay back the money. This past school year it was 3.4 percent.

Since Congress didn't act on extending the 3.4-percent interest rate for the upcoming school year, the rate doubled back up to 6.8 percent.

Dr. Patricia Hurley is with the financial aid office at Glendale Community College. She says government loans are better for students even at 6.8 percent than loans at lower rates offered at some commercial banks.

"Federal loans still have some benefits for students," said Hurley. "There are forgiveness provisions, they're working with the government rather than a a commercial lender, so we still think that student loans are a better bet for students than a private loan."