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Sunday, January 23, 2022

Congress passes bill to keep current loan interest rate

For Crystal Durham, not taking out a loan wasn’t an option.

Financial aid covered tuition and housing, but she had other expenses during her first semester at UF.

“I didn’t have any money to actually eat with,” she said.

She ended up taking out a loan for a little more than $2,000 during her first semester at college, and another for about $2,700 last spring.

Durham, a 21-year-old computer engineering senior, is one of 7.4 million students who will benefit from a bill approved by Congress on Friday that allows the interest rate on student loans to remain at 3.4 percent instead of doubling.

In 2007, Congress made an agreement allowing the interest rate on Stafford loans to drop from 6.8 percent to 3.4 percent over five years.

If no additional agreement was reached this year, the loan rate would’ve returned to 6.8 percent effective Sunday. The deal will be renegotiated next summer.

The $6.7 billion deal will be financed by changes to federal pension insurance.

According to Tim Mason, president of Florida College Democrats, students with federal loans will save an average of $1,000 a year at the lower rate.

“It seems like Congress has realized that importance [of arriving at an agreement] and made it a priority,” he said.

The debate about whether to raise the interest rate was really a discussion about furthering higher education and helping students pay for their futures, Mason said.

“People ought not to have to mortgage their future to invest in it,” he said.

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Not all university students will be able to benefit from the loan deal.

A budget compromise passed last year included a provision disqualifying graduate students from receiving subsidized loans. Mason doesn’t anticipate movement on the issue.

Durham said she was relieved to hear about the loan rate staying at 3.4 percent for now.

She said if the rate doubled, she would worry about how to pay off her loans quickly. With the deal, she’ll pay at a steady rate, with less anxiety.

“There’s not as much of a sense of urgency to pay it off,” she said.

Contact Erin Jester at ejester@alligator.org.

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