College graduates face tough job market
BUFFALO, NY - The interest rate for a subsidized federal student loan could jump from 3.4% to 6.8% very soon.
Many college students have Stafford loans. It is subsidized and the federal government absorbs some of the interest. It is a fixed-rate student loan for undergraduate and graduate students attending college.
A 2007 law that kept federally subsidized Stafford loan interest rates low expires July 1st, if Congress doesn't extend them. Interest rates on some 7.4 million student loans will double from 3.4 to 6.8 percent.
Tony Ogorek of Ogorek Wealth Management doesn't think an increase of the interest rate will mean much. "It's not a doubling of your loan payment," he said. "Bottom line is, it only means 20-bucks a month," on top of your monthly payment once the loan has to be repaid.
Here's an example, if rates were to stay at 3.4% for $11,300 in total subsidized Stafford loans, the average amount to repay is $15,630 over 20 years. If rates jump to 6.8% and remain there, the person would repay $20,755, over that period.
Some 7 million students taking out loans for the next school year will have to dig deeper to pay them off if Congress doesn't halt the increase.