UNR students now face higher rates on Stafford loans, until Congress acts

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UNR students now face higher rates on Stafford loans, until Congress acts

Wolfe

Timothy Wolfe is Director of Financial Aid and Scholarships at UNR. Students at the University of Nevada Reno have just seen the rates on some of their federal loans double, because Congress failed to act by the July 1st deadline.

38 percent of UNR student loans are subsidized Stafford loans. Until last week, they were able to take out loans at the rate of 3.4 percent, but Congress failed to reach an agreement by the first of July, and, as a result, students all over the country who now want to take out a Stafford loan have to pay double that rate, which is 6.8 percent.

Timothy Wolfe is the Director of Financial Aid and Scholarships at UNR.

"What that means over the lifetime of the loan is, if they take ten years to pay back the loan, it's about 40 extra dollars a month in their repayments."

Wolfe says about 750 students will get new loans this year. Congress' Joint Economic Committee estimates the average student in the U.S. will pay an extra 2,600 dollars. Wolfe says the most popular loan at UNR is the subsidized Stafford loan and at many schools the number of students who rely on that kind of loan is higher, usually around 50 percent.

Meanwhile, members of Nevada's congressional delegation are taking different stances on the issue. The Republican-led House passed a bill in late May that makes the interest rate variable for Stafford loans, which means for this coming year the rate would be less than 5 percent, but could go up in the future. Representative Mark Amodei has stood behind that proposal.

Senator Harry Reid, on the other hand, took the Floor today to criticize that plan:

"But if either the legislation passed by House Republicans or the plan proposed by Senate Republicans becomes law, then student loan rates would more than double over the next few year as interest rates go up."

Timothy Wolfe at UNR says he hasn't heard much from students yet, because the rates are brand new and the impact won't be felt for sometime. Students don't start paying off the loans until 6 months after they graduate.

"Probably four years from now, when they graduate, what's the rate on my loans? What's the repayment going to be on them?"

If Congress works out a solution, Wolfe says there's a possibility they could retroactively lower the rates for students who took out loans at the doubled rate.