It’s March, and it’s déjà vu all over again as students and consumer advocates try to raise awareness of a coming increase in interest rates on some federal student loans.

On July 1, just like last year, rates on subsidized loans made to low- and moderate-income undergraduates under the federal Stafford program are scheduled to double. Again, like last year, the rate is set to rise to 6.8 percent from 3.4 percent for new loans made after June 30.

In case you’ve forgotten, here’s a recap. The College Cost Reduction and Access Act of 2007 reduced rates on subsidized Stafford loans over four academic years, to the current 3.4 percent from 6.8 percent. But the rates are scheduled to bounce back up, unless Congress acts to extend the current rate.

Last year, Congress extended the lower rates for one year. So, here we are again.

On Wednesday, the House Committee on Education and the Workforce will debate the costs and benefits of the federal student loan program, including student loan interest rates.

The debate comes as growing student debt, which has reached $1 trillion, has become a concern for policy makers and regulators.

“Congress must not double the rate,” said Ethan Senack, higher education advocate with the United States Public Interest Research Group. The group and student leaders are calling on Congress make the rate reduction permanent. The group estimated that the lower rates this academic year saved nearly 8 million students about $1,000 each on their loan costs.

Do you depend on subsidized Stafford loans? How would the rate increase affect you?

A version of this article appeared in print on 03/16/2013, on page B4 of the NewYork edition with the headline: Student Loans:
Rate at Issue.

Article source: http://bucks.blogs.nytimes.com/2013/03/13/rates-on-some-student-loans-again-set-to-double/?partner=rss&emc=rss