Congress Closes the Book on Student Loan Interest Rates - Hawaii News Now - KGMB and KHNL

Congress Closes the Book on Student Loan Interest Rates

It's academic.

Congress cut a deal to freeze new student loan interest rates - just in the nick of time. The move affects nearly a quarter of University of Hawaii's student body.

But talk about waiting 'til the eleventh hour! Congress had until tomorrow to avert the doubling of new student loan rates. But, members managed to hammer out a deal that keeps those rates stable for one more year.

24 year old Alexandra Hutchison will have a mountain of debt when she gets her master's degree in two years. "$100,000 is ... so much money!" she says.

The Kona woman wants to work at UH - once she graduates from Rice University. Not surprisingly, she welcomes news of a stable loan rate - saying it helps students, like her, pursue an advanced education. "It makes it so much so less stressful, the whole process of dealing with taking out loans and getting ready for school," Hutchison adds.

By passing the measure, news student loan rates will remain at 3.4%. Congress had until July first to make it work - or that rate would double to 6.8%. This move saves an average of $1,000 per loan.

Republicans and Democrats needed to find $6 billion to keep rates low for one more year. The compromise came by raising premiums for federal pension insurance.

Across the University of Hawaii's 10 campuses, about 15,000 students will be affected by the deal. That's about 25% of the entire student enrollment. UH Manoa says the deal will help bring more students into the fold.

Francisco Hernandez, UH Manoa's Vice-Chancellor for Students says, "It also allows them, the federal government, to allow for more loans, so that our students can afford to go to graduate school or professional school."

Also, the length of a federally-subsidized student loan will be capped at 150%. So, for instance, a student enrolled in a four-year program will be eligible to receive loans up to six years, max.

Matthew Tengasantos expects he'll be paying off his student loan for another decade. He says, "Not having to pay as much interest is awesome, but it still doesn't really help because school's just still really expensive."

Yet another issue to tackle - now that Congress has closed the books on this one.

Copyright 2012 Hawaii News Now. All rights reserved.

Powered by Frankly