Obama plans to change student loan interest rates

Photo by Valeria Sistrunk

When President Obama proposed his 2013 budget, he also included a big change to student loans.  The president’s administration plans to change the interest rate on student loans each year based on the government’s borrowing costs.

Patricia Hudson, a Spelman alumna, says she’s been paying off her student loans for almost 10 years now. “I’ve been paying off my student loans, I would say, faithfully since 2002 or 2003,” said Hudson.

Officials say, because of people like Hudson Obama wants interest rates on federal loans to adjust to reflect today’s low-interest-rate environment.

But what if the economy were to pick back up? Of course, interest rates would rise along with it, which is why consumer groups disagree with Obama’s plan. They criticize the proposed change for not having a cap on the amount of increase.

“It’s not a very progressive way of trying to deal with a situation that’s been out of control for 20, 30 years, which should be completely revamped in the first place,” said Hudson.

Because of the possibility of loan interest rates increasing, critics predict students might search for other options to pay for school. 

Nikkita King, a senior criminal justice major at Florida A&M, says she doesn’t like the new bill and if passed, “It would really discourage me from getting loans…there are a lot of scholarships and grants out there, and I think that would probably be the best way to go.”

If President Obama’s proposal doesn’t go through, the rates on subsidized loans are set to double to 6.8 percent this summer.