College students are waiting to see if the U.S. House passes a student loan deal approved by the Senate. Three weeks after student loan rates doubled, senators from both parties hammered out the deal.
It brings rates down in the short-term, but they likely will go back up in the long-term.
36-year-old Tammie Wimberly is a sophomore at Albany State University studying pre-nursing. As a licensed practical nurse for ten years she decided to go back to school to become a nurse practitioner, but says she's had to take out $20,000 in loans to do it. "That's the only way to be honest with you that I could attend school."
The Senate bill lowers the interest rate for undergraduates to 3.86% after it doubled to 6.8% this month. Thomas Harris oversees financial aid programs at Albany State and says that 61% of their students last year received Stafford loans that come in two forms based on a student's eligibility.
"The thing to understand that the rate that is being discussed and the decision that has been made upon is an annual percentage rate for student loans," said Harris.
An Unsubsidized loan the government does not pay the interest, so that 3.86% that you're talking about now that is the interest that you will be accruing each year that the government will not pay. But if you do have a subsidized loan as a part of your award package then the government will pay the interest for you.
Financial advisors say they always advise their students to be aware of how many loans they are taking out because those loans could have a costly affect on their future.
Harris said, "It's affecting the repayment of those loans after they are out of school."
Which is a concern for Tammie Wimberly "Right now all my loans-- I don't have to pay them back until I finish school, but once I finish school-- I think that's when the big problem is gonna hit."
Harris says that students should only borrow what they need and that it's best to make payments on the interest while they are still in school. The bill does not apply to loans that students receive from private lenders and includes provisions that will increase rates in the future.
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