stafford subsidized student loan

Interest Rates Rise on Student Loans

Students who rely on federally-subsidized Stafford loans are being told to consolidate their loans before steep interest rate hikes go into effect tomorrow.

On July 1, interest rates on Stafford loans—the principal form of federal student loans—will rise from 5.3 percent to 6.8 percent for new loans and 7.14 percent for outstanding loans. This marks one of the single largest rate increases in the program's 41-year history.

Though Stafford loans are used more by students at Harvard's graduate and professional schools than by its undergraduates, over 9 million people—students and former students of all sorts—currently have outstanding loans.

Over the past several weeks, the interest rate hikes—which were put into place by the 2005 budget resolution—have drawn fire from Democratic lawmakers.

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Consolidation could save on college loan

The latest government reports show the amount of student loan debt has skyrocketed to more than $50 billion. Now, students, parents and graduates have only a few days to save money.

Getting accepted to the college of your choice may not be as difficult as paying for it. More than 60 percent of U.S. students are graduating with student loan debt.

"I was going to need a lot of money to help pay for living on campus," University of South Florida/St. Petersburg campus senior Jennifer Massey said. "I got the federal Stafford loan, the subsidized Stafford loan, so that's about $7,000.

Massey is one of nine million people across the country with a federal Stafford loan.

But as they try to beat the deadline, students are calling loan consolidation companies like OneSimpleLoan in Pinellas County.

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