Washington DC Bankruptcy Attorney: Federal Student Loan Interest Rate Will Double Unless Congress Acts

The New York Times recently reported that student loan interest rates could double for federal borrowers beginning this summer. On July 1, rates on subsidized loans made to low- and moderate-income undergraduates under the federal Stafford program are scheduled to increase from 3.4 percent to 6.8 percent.

Unless Congress agrees to lower the rate, an increase will occur. “Congress must not double the rate,” Ethan Senack of the United States Public Interest Research Group told the Times. The interest group said they are lobbying lawmakers to keep the interest rates low, as current student loan debt has reached $1 trillion nationally.

The College Cost Reduction and Access Act of 2007 reduced rates on subsidized Stafford loans to their current 3.4 percent interest rate. For student loan borrowers facing financial problems, a raise in interest rates would be disastrous. In most cases, student loans are nondischargeable in bankruptcy. However, a Chapter 7 bankruptcy filing can eliminate debts like credit card debt and medical bills, which may help a borrow make student loan payments.

To find out more about whether bankruptcy can help you with your student loans, contact our Washington DC and Maryland bankruptcy lawyer now for a free consultation.

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