Experts Tell Loans.org that Stafford Loan Interest Rates May Still Change
Los Angeles, CA (PRWEB) July 03, 2013 -- July 1, 2013 was the deadline for Congress to extend the artificial interest rate cap on federally subsidized Stafford loans, but despite rallying for an extension, interest rates on subsidized Stafford loans increased on Monday, according to a report by loans.org.
However, experts told loans.org that a resolution will still likely be met.
Eric Greenberg, founder and president of the Greenburg Educational Group, said that a plan of action will be passed retroactively once Congress returns from its break.
Those monitoring this situation believe Congress will agree to one of two main proposals. The first proposal is to link Stafford loan interest rates to yearly market values.
If the interest rate is set at market value, it will take advantage of the current low rates. But opponents of this plan worry about the future of interest rate increases in the coming years. Greenberg said it could even hinder a student’s decision to pursue higher education.
“If there was no cap on it, it could make it much more difficult for the student to decide to make the plunge,” Greenberg said.
When bills adjust, it becomes difficult to establish a personal budget. Student loan borrowers may then find themselves facing obstacles similar to borrowers of adjustable rate mortgages.
The second proposed plan would extend the current interest rate cap on subsidized Stafford loans for two more years.
However, doing so would cost the government an estimated $8.3 billion. Greenberg believes that the economy will suffer even more that multi-billion dollar price tag insinuates.
He told loans.org that increased rates will reduce disposable income and impact the educational output of students, causing a “ripple effect” on the economy.
For the full analysis on these two proposals, please read the industry study at http://loans.org/student/research/historical-interest-changes-subsidized-stafford.
Additional articles, interviews, news and frequently asked questions about the student finance industry are available at http://loans.org/student.
About loans.org:
loans.org is a leading lending authority website that covers financial news, produces informative articles, and answers frequently asked questions. In addition to providing lending-related information, loans.org also hosts a variety of free online application forms for prospective borrowers to use when applying for loans.
For more information, please contact:
Rebekah Coleman
Rebekah(at)loans(dot)org
(909) 784-2465
Source: loans.org
Rebekah Coleman, Loans.org, http://loans.org/, (909) 784-2465, [email protected]
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