Alarm over possible spike in student loan interest rates

  • Sonoma State University student Patrick Maloney works at his job at Residential Life on the SSU campus, Thursday May 2, 2013 in Rohnert Park. (Kent Porter / Press Democrat) 2013

Interest rates on some popular federal student loans are set to double in two months, a prospect that has alarmed students, parents and activists concerned about soaring student debt.

"It's ridiculous," said Patrick Maloney, a Sonoma State University junior who is involved in California State Student Association lobbying efforts to prevent the rate increase.

"It's disappointing and yet another instance where higher education is not being fully supported," said Maloney, a senator on SSU's student government body, Associated Students.

A U.S. Senate resolution would indefinitely extend the current rate of 3.4 percent on subsidized Stafford loans. But the House of Representatives budget plan would allow the rates on those loans to climb to 6.8 percent on July 1, as is currently scheduled. That would affect all future borrowers.

Also, President Barack Obama's budget proposal would lift the cap on interest rates for all student loans. Without it, based on Congressional Budget Office projections, unsubsidized student loan rates could hit 8 percent by 2013.

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