Update on Student Loan Rates Increasing
Published on July 15, 2013
It has been reported on FoxNews.com that as of July 1, 2013, the interest rate on Stafford subsidized loans has doubled to 6.8%. Congress was not able to reach an agreement on how to keep loan rates down and on July 10 Congress met again to discuss the increase in loan rates. Unfortunately Congress was unable to come to an agreement that would let Stafford subsidized loans to go back down to 3.4%. Therefore, some students may not be able to afford to go to college because the loans will be prohibitively expensive to pay back.
A little history
Loan rates were dropped to 3.4% in 2007, where they stayed until June 30. In July 2012, when the rates were originally scheduled to increase to 6.8% (double), the deadline was extended by another year. However, unlike last year, Congress was unable to come to an agreement about Stafford loans and how to keep rates down.
Education is extremely important when it comes to the betterment of the country and the individual and with the rising cost of post-secondary education, so is saving up to go to school. Saving for education can be set up through special accounts that reduce the student’s (and family’s) reliance on student loans, whose rates may increase a lot as we just witnessed. One way to do this is with a Coverdell Education Savings Account (ESA). A Coverdell ESA is a tax-deferred trust account that helps families fund educational expenses and if used for approved educational purposes, the funds are tax free when taken out. You can learn about Coverdell ESAs and other accounts at Next Generation Trust Services website. The staff at Next Generation Trust Services is here to answer any questions you may have about retirement or education savings accounts.Back to Blog