Interest rates on student loans to sky rocket in US
By Ruchi Shrimali
Federal Stafford loans in the US are one of the most popular and low-cost ways to pay for college in the US. About 70 lakh American students have taken these loans to pay for the undergraduate and graduate programmes they enroll in. About 3,34,000 of these students belong to Asian American and Pacific Island student communities in the country. The doubling of interest rate for Stafford loans – from 3.4 per cent to 6.8 per cent – has been scheduled for July 1, 2012, sparking a debate on the issue.
Academicians and students have appealed to the US Congress to stop the impending hike of interest rates in undergraduate education loans for students. The Society of Indian Academic, New York, is opposing the increase in student loan interest rates too and thinks that the move will severely affect Asians, who are very devoted to education. Subsidised Stafford loans are based on financial need of students.
At present, Americans owe about one trillion dollars in student loans. The student loans surpassed credit card debts in 2010 for the first time. Steep rise in education costs has already burdened students and their families in America. Hence, the proposed hike in education loan interest rates is creating quite an outcry across the nation. Read more
To help in making college education more affordable for students, the Obama administration has introduced few improvements, including:
- Increase in Pell grants,
- Income-based repayments after graduation, which takes family size and income of student into account, and
- ‘Loan forgiveness’ for students who opt for public service jobs that pay much lower than corporate jobs.
Know more about student funding by top US universities.
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