On Friday President Barack Obama signed a new student loan deal into law. He did it surrounded by members of both the Democratic and Republican parties in the Oval office. The bill ensures that college students won’t be seeing huge student loan interest rate hikes when they return to school for the fall semester.
Around 11 million college students are to benefit from the newly signed bill. Undergraduates can now borrow at a 3.9% rate for both subsidized and unsubsidized loans. The rate before this was 3.4% for undergraduates. Graduate students can borrow at a 5.4% rate and their parents can borrow at 6.4%. These lower interest rates are in place so the government can cheaply borrow money. If the economy improves though, borrowers will see the rates rise.
This bill the President signed addresses the terrible issue of student loan debt in the United States. Right now many students are drowning themselves in debt they may not be prepared to pay off in the future. To make matters worse, finding a job after college in the field they went to school for is becoming increasingly harder to do.
In the last ten years the annual tuition of community college and public universities has drastically risen. The educational options that were supposed to be more affordable have now started to become financial burdens on students and their families. College Board, a nonprofit group that runs the SAT's, says community college costs are up 40% and now cost $3,122 a year, while public universities rose 68% and student’s bills for the year amount to $7,692. Here on Long Island the tuition for Suffolk Community College is $2,070 a semester, and at Nassau it's $2,044 a semester.
The scariest number in all of this is total outstanding student loan debt in the United States. That number lies between $902 billion and $1 trillion according to the Federal Reserve Bank of New York and Consumer Finance Protection Bureau.