As expected, the interest rate on subsidized Stafford student loans doubled July 1 from 3.4 percent to 6.8 percent.
President Barack Obama and several legislators attempted to at least delay the hike for another year, as they did last year, but were unsuccessful in reaching an agreement before the July 4 Congressional recess.
The increase in interest is expected to raise student debt loads by roughly $1,000 per person over the life of the loan. This year, with the lower interest rate, the federal government is expected to generate $50 billion in revenue from its student loan programs, according to the Connecticut Public Interest Research Group (ConnPIRG).
“Congress should keep in mind that the ultimate goal of investing in students is to invest in our future economy,” said Abe Scarr, ConnPIRG director, in a press release. “It is shortsighted to generate profits now off the backs of college students while pushing them deeper into debt in the process.”
Subsidized Stafford loans are offered to undergraduate students who have demonstrated a finacial need to pay for college tuition. Unlike unsubsidized loans, students don’t need to pay interest on the loan while they are enrolled in school at least half time and for the six months after they leave school.
Though there is still time for Congress members to act, the interest rate hike is expected to affect 73,051 students in Connecticut. The increase in debt is estimated to cost students a total of  $68 million in Connecticut, which is about $937 per student.
