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Federal student loan rate set to increase

Published On: Jun 27 2013 08:00:00 PM EDT   Updated On: Jun 28 2013 08:25:32 PM EDT

An "A" for effort? Not quite.

An "A" for effort? Not quite. The U.S. Senate has no plans to take action before student loan interest rates double on Monday. And students say they're not happy about it.

For Penn State Lehigh Valley senior Renee Johnson, loans are a way to reach her dreams of working with computers, and a way to get a diploma.

"Financial aid is real important to me personally," she explained. "Because financial aid is what pays for my school."

But it also means a huge weight on her wallet.

"I think I have like $30,000 in loans."

And that number could go up. By law, the interest rates on new subsidized Stafford loans through the government are set to spike from 3.4% to 6.8% July 1st. The timing is less than ideal for many students.

"I'm really concerned about the Stafford loan interest increasing by double," shared Penn State junior David Coyle. "That's significant."

"College is already expensive enough as it is," added Brian Roam, a sophomore at Penn State. "So I would like them to stay as low as they possibly can."

For undergrads, the rate hike could mean thousands of extra dollars they'll be forking out to pay for their education. Some estimate the higher rates could tack on an extra $1,000 to $3,000 on a loan repaid over 10 years. Students say it adds up.

"Don't raise it for us college kids, we're already spending enough money for the degree and trying not to be in as much debt when we come out," said Roam.

But not all loans are the same, and the cost of the interest rate up-tick will vary from student to student.

"I'll probably go to PNC Bank or a different lender," stated Coyle. "So hopefully they don't change it because my business is going to go somewhere else."

When Congress gets back from its July 4th recess they could reach an agreement to keep rates at 3.4%, and they can make it retroactive. Meaning the increase would be reversible.