On July 1, 2013, interest rates on federally subsidized student loans effectively doubled, from 3.4% to a whopping 6.8%. Relied on by millions of people around the country, these federally backed loans are often the lifeblood of students as they struggle to keep up with the ever-rising cost of college tuition and attempt to avoid costly private loans. However, due to an existing political stalemate over how to address the issue of expiring legislation that has kept the rate at 3.4% since 2010, students taking out new student loans could be stuck with the doubled rate if Congress isn’t able to reach an agreement soon.
The impact of this news hits on all levels of the economic landscape. In fact, according to CBS News analyst Mellody Hobson, a higher rate for student loans will be felt in the housing market as well, as people with student loan debt are 36% less likely to own a home of their own. Much of the debate over these interest rates lies in how to adjust the rates moving forward, with some suggestions to tie the rate to that of the 10-year Treasury Borrowing Rate, which is currently set at 2.5%, plus an additional sum.
The jury is out as to whether or not our lawmakers can effectively agree on (at least) a short-term solution, but if you’re currently paying off your own student loans, here are some resources to help you along the way:
Beware Student Debt Relief Scams [Bargaineering]
Unfortunately, given the trillion-dollar crisis that is the state of student loans in our country, there are more than a few savvy (yet not very honest) entrepreneurs looking to cash in on your frustration and fear if you’re drowning in student loan debt. Miranda’s post highlights some of the things you need to consider if you’re tempted to take advantage of these often too-good-to-be-true debt relief programs. From hidden fees, to misrepresentation and sneaky arbitration clauses, you’ll want to think twice before moving forward with any of these options.
7 Practical Tips on How to Deal With Student Loan Debt [The College Investor]
From making your student loan payments a top priority, to creating a game to help bolster your payoff efforts, Kathleen offers some practical tips that anyone paying off student loan debt can appreciate. As she highlights, there are nearly 37 million Americans saddled with student loan debt, and the average balance hovers around $24,000. Using these ideas, you can pay off your loans quicker, and free up cash to put toward your savings goals.
My Student Loan Story: How I Paid It Off in One Year [Get Rich Slowly]
If you’re overwhelmed with student loan debt and are looking for some inspiration to begin tackling it, you’ll definitely want to check out Kristin’s post. In a year filled with sacrifices (watching every dime she spent, negotiating to lower her bills, avoiding lifestyle inflation that her friends indulged in, and ultimately moving home with her parents), she worked herself through more than $12,000 in student loan debt. By following her tips and tricks, you can apply the same fortitude to your own debt payoff journey and free yourself from student loan debt for good.
Why Paying Off Student Loans Should Be a Priority [Modest Money]
In his guest post on Modest Money, Ryan covers the pitfalls of both federal and private loans. The bottom line he’s stressing is that no matter which type of student loan debt you’re carrying or how small or large the balances, you need to attack it with all of your effort so you can pay it off ASAP.