Students who take out federal loans will face even steeper fees next fall as interest rates surpass 5 percent.
Undergraduates will have to pay 30 percent more in interest compared to last year after a new law goes into effect tying interest rates to the 10-year Treasury note, Vox reported Wednesday.
The jump is still far less than the increase that would have gone into effect without last year’s stopgap legislation – though the interest rates will rise past 7 percent over the next four years, according to estimates released this week by the Congressional Budget Office.
This year, interest rates will rise to 5.04 percent from 3.86 percent in the 2013-2014 academic year.
Interest rate increases have faced opposition from Democrats. Led by President Barack Obama, activists and students launched the “Don’t Double My Rate” campaign last year.
At $33,399, the average debt load for GW students is higher than the national average of $29,400. But only 1.5 percent of students default on those loans, which is well below the national average.
The good news: federal student loans are subject to a fixed rate. For students who have already taken out their loans, their interest rate will not increase.
Congress will have the chance to change the law again this year, but its unlikely to lower interest rates as the government is projected to possibly make billions of dollars on student loans over the next decade.