Senate and House leaders announced this week that they have a tentative deal to prevent an increase in federal student loan interest rates that is scheduled to occur on July 1st. If Congress does indeed come to an accord, students who would have been affected by the rate increase will save an average of $1,000 per year.
However, that’s not the only change in the federal loan program that is coming down the pike, and the others are decidedly detrimental to students, as the Washington Post noted today:
College students are facing a roughly $20 billion increase in the cost of their federal loans, despite a much-heralded deal in Washington to contain the expense of higher education.
Starting Sunday, students hoping to earn the graduate degrees that have become mandatory for many white-collar jobs will become responsible for paying the interest on their federal loans while they are in school and immediately after they graduate. That means they’ll have to pay an extra $18 billion out of pocket over the next decade.
Meanwhile, the government will no longer cover the interest on undergraduate loans during the six months after students finish school. That’s expected to cost them more than $2 billion.
By some estimates, outstanding student loan debt in the U.S. has hit $1 trillion. Today, two-thirds of students go into debt in order to obtain a bachelor’s degree. Meanwhile, college dropouts make $1 million less over the course of their careers than college graduates.