Arizona college students brace for rise in student loan interest rates
Starting July 1, interest rates for most new government student loans are going up. That is because last week, Congress failed to act to keep rates at their current levels. The change puts hundreds of thousands of Arizona college students in a financial bind.Interest rates will double for federally subsidized Stafford loans that go to students from low-income families. The rates may vary but no matter what, they will double. Here in Arizona, about 140,000 students at the universities are affected and another 250,000 in community colleges:
“I’m actually pretty terrified to see how I’m going to be able to make my student loan payments when I graduate” said Anthony Carli, a senior political science major at the University of Arizona. He has more than $70,000 in student loans. He has researched how long it will take to repay them.
“I think that the number was somewhere around 20 years, perhaps higher. I’m going to be paying these things for a very long time," Carli said.
MacKenzie Mastrude is student body president at Northern Arizona University. She is paying out-of-state tuition and working two jobs to make ends meet. She just got back from Washington where she lobbied Congress to find other ways to raise revenues for deficit reduction.
“I’m going to college to better myself and better my future family, and I can’t do that because I’m being put responsible for paying back this deficit” said Mastrude.
Michael Powell is executive director of the Arizona Students Association, and he is also baffled why Congress did not cut other areas.
“The Stafford loans, you’re not allowed to default on these loans, and those loans are paid in full and whatever interest is paid on those loans is a return for the lender and a return for the United States government,” Powell said.
Economists fear the hike in interest rates will lead to a rush of student loan defaults that could rival the home mortgage crisis during the recession.