College students get a break after Congress meets a deadline and keeps the rate on student loans stable.
The interest rate on subsidized Stafford loans for undergraduate students will remain at 3.4%. It would have doubled on July first if Congress hadn’t attached an amendment to the $100 billion transportation bill.
It’s a big relief to Nebraska students, according to Director Craig Munier of the Office of Scholarship and Financial Aid at the University of Nebraska-Lincoln.
“For many students who are borrowing for the first time now through their undergraduate career that could mean about a thousand dollars less indebtedness than they would have incurred in additional interest charges had the interest rate doubled,” Munier tells Nebraska Radio Network.
Munier says the average Nebraska college student leaves school with $21,000 in debt. It remains a good investment, according to Munier, who points to studies which indicate a college graduate makes, on average, $1 million more than a non-college graduate over their lifetime. About 55% of Nebraska students borrow to pay for college.
The student loan rate became a campaign issue with President Obama using it often to bash Republicans in Congress. Negotiations broke down several times until, with the deadline fast approaching, a deal was struck.
Part of that deal worries Munier. Congress will take some money used to support Pell Grants to keep Stafford loan rates stable. Munier says a majority of the students who borrow come from poor to Middle Class families, the same families that rely on Pell Grants to finance education costs.
President Obama plans to sign the legislation into law today
AUDIO: Brent Martin reports [:40]
AUDIO: Brent Martin interviews Craig Munier of UNL on student loan rates and borrowing for college. [6:06]