Cost for higher education is now higher for many students
Updated On: Jul 02 2013 07:45:54 AM HST
Because Congress was not able to reach a deal to extend lower rates, the interest on a subsidized student loan has doubled.
That means millions of students, including many in Hawaii, will have to pay more for their education.
Lindsey Ewing is a new graduate at Hawaii Pacific University, but along with getting her degree she also has a student loan debt of nearly $20,000, which will take her years to pay off.
"That's the only thing left, then I'm done. But it might be ten years or more to pay it off," said Ewing.
Even with that debt, she's one of the lucky students who only has to pay an interest rate of 3.4% on that borrowed money. Students who now taking out new subsidized federal loans will be charged 6.8% in interest.
"Looking at a standard ten year repayment plan, a student will end up paying $4000 more in payments. That means their monthly payments go up," said HPU Financial Aid Director Adam Hatch.
At the University of Hawaii, Spencer Mawhar started racking up student loans during his time in grad school. He has more to go -- that means more debt to repay for him and his growing family.
"As a father, a husband with a family it is going to be more difficult with that loan now," said Mawhar.
Higher rates could cut the number of full-time students and force others to find alternative ways to pay for college.
"I think I will have to bite the bullet here. I will look for more scholarships, things I won't have to pay back, but it will definitely give me pause before taking more loans," said UH student Andrew Baker.
Not only are some upset over the huge jump in rates, they're upset over who will be paying more.
"These rates are going up for those who can least afford it. These are subsidized loans going to low-income students. UH-Manoa has many of those students," said Francisco Hernandez, the Vice Chancellor for Students at UH.
It is not just students who worry about this big rise in interest rates.
"We've had some students talk about it, but for a typical undergrad student it is their parents who are most worried. Parents are involved in this decision and want to know if we can lock in the lower interest rate, but we can't," stated Hatch.
Not only will school be more costly for those with student loans, the higher interest rates will also lower borrowing limits -- which could also reduce the amount of school a student can afford in the future.
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