New Student Loan Costs, Despite The Deal on Interest Rates

We reported here that congressional negotiators had come to a deal that prevented federal student loan interest rates from doubling on July 1 (from 3.4% to 6.8%). But as the Washington Post explains in this article there's some fine print that students are going to hate:

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.

 

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That means they’ll have to pay an extra $18 billion out of pocket over the next decade.