HONOLULU (HawaiiNewsNow)- Double trouble for students taking out new federal loans to pay for college. Interest rates will double Monday, July 1st with Congress in recess and no votes on the issue planned until July 10th.
The looming hike will put extra financial pressure on thousands across Hawaii.
Interest on an estimated 7-million new federal student loans will double from 3.4 to 6.8 percent on Monday.
In Hawaii, the switch will hit UH Manoa students hard. Nearly one-third of the State's Stafford loans are taken out by students there.
UH Mânoa Vice Chancellor for Students Francisco Hernandez told Hawaii News Now, "In any given year, we have 4800 to 5000 students with subsidized financial aid so doubling interest is quite significant. That group borrows about 20 million."
The interest rate hike could cost the average student 24 to 28-hundred dollars more over the life of their loan.
According to Hernandez, for UH Manoa students, "It could be a difference of 13 million in interest so that's significant for our students."
Multiply that number by three if you add up the 15-thousand loans across UH's ten campus system.
According to the White House, more than 17,000 students have borrowed an average of more than $3,700 with the Stafford loan in Hawaii.
Founder of FinAid.org, Mark Kantrowitz says, "Each year the average cost of graduation goes up by about a thousand dollars or more and having less expensive debt isn't going to make much of a difference if the total amount owed keeps on going up."
UH tuitions have doubled over the past 5 years. Now with interest rates doubling too, students will be paying for that diploma long after graduation.
More than 38 million Americans have student loan debt, totaling nearly one trillion dollars.
The U.S. House voted to extend student loan rates, but there's a stalemate in the Senate. The hope is that Senators reach a deal quickly when they take up the issue again July 10th.
Rate changes would be retroactive to July 1st.