College Loan Rates Likely Doubling Monday

By Sonia Su

Interest rates on college loans are likely to double for more than 100,000 Maryland college students on Monday, jumping from 3.4 percent to 6.8 percent without congressional action.

"With immigration taking center stage on the Senate floor this week, it's unlikely anything will get to the president's desk before July 1 when the rates automatically double," according to U.S. News, which compiles annual college rankings. 

With the average loan debt at about $24,000, students in Maryland would have to pay an additional $95.4 million, or an average $909 more for each student, according to the Baltimore Business Journal, citing figures from Maryland Public Interest Research Group.

On May 23 of this year, the U.S. House of Representatives passed the Smarter Solutions for Students Act, under which the loan rate would be reset every year, depending on the interest rate on U.S. Treasuries, U.S. News states.

However, Congress has not agreed on a plan to address the issue.

One plan supported by Sen. Barbara A. Mikulski, D-MD, of Baltimore would extend the 3.4-percent rate for two years and give lawmakers more time to create a more long-term solution, according to Southern Maryland Newspapers.

President Obama told college students at a Rose Garden ceremony in May that student loan debt forces people to cut back on spending and therefore fueling the economy, according to the Baltimore Business Journal.

"It holds back our entire middle class," he said.

UMBC rising junior Atib Siddiqui said the rate increases won't affect him but he said it will be felt by many of his friends.

"A majority of my friends are using student loans to finance their education, and increasing the interest rate on their loans would be devastating," Siddiqui said. "It's already hard enough to find a job coming directly out of college now, and with the pressure of paying off expensive loan, life after graduation seems very dark."

About 57 percent of people with student loans are concerned about being unable to repay them, according to a new study by the Urban Institute’s Opportunity and Ownership Project.

The increase "would be a crippling blow to many college students, and affects the admission of future students as well," Siddiqui said.

"I cannot see any positive outcome out of this for any college student now or in the future," Siddiqui said. "Why are we punishing students who are choosing to further their education? It just doesn't seem right to me."

Colleges in the Baltimore metro area include UMBC, Community College of Baltimore County, Johns Hopkins University, College of Notre Dame of Maryland, Towson University and more.