The Rate On A Popular Student Loan Is About To Double

sad face, girl

Photo: Flickr / joshuawillis

The interest rate for a popular federal student loan is about to double for millions of college students.The prospects of this happening has prompted students to petition Congress to stop the dramatic rate hike.

College students on Tuesday delivered petitions signed by 130,000 Americans to Congressional leaders. 

Threatened student loan

The loan that is causing students to panic is the subsidized Stafford Loan, which low- and middle-income students depend upon.

Currently the interest rate is 3.4 per cent, but it is scheduled to jump to 6.8 per cent when the new federal loan season begins July 1.

Students learn from their college or university if they qualify for a subsidized Stafford Loan after they complete the Free Application for Federal Student Aid (FAFSA).

Besides the low interest rate, the federal government covers the interest payments on these loans until the borrowers have been out of college for six months.

In addition to the subsidized Stafford, there is a unsubsidized version that college students can qualify for regardless of their income.

The interest rate on the less desirable Stafford has been at 6.8 per cent for quite a few years. 

Read the rest of the story on CBS MoneyWatch >

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