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Posted by: Maricopa Lawyers on Jul 4, 2013

College freshmen seeking student loans will now incur an interest rate of 6.8%, Congress failing to pass new legislation preventing the rate from doubling. The higher rates will result in additional fees of hundreds to thousands of dollars for these students.

The majority of undergrads are understandably concerned about their economic future with the imposed rates. Some students will experience six figure debts by the time they graduate. Economic achievements such as buying a new house or car may not present themselves as real opportunities for decades.

Congress faced the same student loan interest rate crisis only one year before. Lawmakers voted for an extension of the lower interest rate of 3.4% with the intent to barter time for a more permanent solution. Different philosophies over how to subsidize student loans has resulted in a stalemate.

Comparing the situation to the housing bubble in recent years, the accessibility of subsidized student loans is perhaps enabling colleges to increase tuition rates at an accelerated rate. The situation could result in a microcosm of what occurred during the housing market collapse. Essentially, college tuition keeps rising because readily available student aid enables it to remain in a state of acceleration.

There is currently $1.2 trillion in federal student loan debt that’s exists within the US, the default rate showing no signs of slowing down yet. Many students desperate for a diploma still believe the staggering cost of student loans has yet to outweigh the financial advantage of higher education.

Some critics believe the student loan crisis is the byproduct of political derision, rival party members in a veritable arms race to place the blame across the aisle. Such critics maintain these politicians are more interested in pushing a smear campaign than resolving the issue altogether.

Congress will readdress the loan crisis on July 10th.