It's not Groundhog Day, but, yes, you've heard this story before. During the presidential election campaign, student loan interest rates were going to double unless Congress acted to keep them low (3.4%), and Congress acted. And, now if Congress doesn't act by July 1, rates will double. Read about it here, or check out this excerpt:
The rate for subsidized Stafford loans is set to increase from
3.4 percent to 6.8 percent on July 1, just as millions of new college
students start signing up for fall courses. The difference between the
two rates adds up to $6 billion. … “What is definitely clear, this time around, there doesn’t seem to
be as much outcry,” said Justin Draeger, president of the National
Association of Student Financial Aid Administrators. “We’re advising our
members to tell students that the interest rates are going to double on
new student loans, to 6.8 percent.” The new rates apply only to
those who take new subsidized loans. Students with outstanding
subsidized loans are not expected to see their loan rates increase
unless they take out a new subsidized Stafford loan. Students’
nonsubsidized loans are not expected to change, nor are loans from
commercial lenders. But it translates to real money for incoming
college freshmen who could end up paying back $5,000 more for the same
maxed-out student loans their older siblings have.
“Students with outstanding subsidized loans are not expected to see their loan rates increase unless they take out a new subsidized Stafford loan.”
I’m confused by this. Will taking out a new subsidized loan increase the rate on previous subsidized loans? Or does the new rate apply only to the new loan?