(MyFoxBoston.com) – High school graduates face a challenging road ahead, and rising college tuition rates already make it tough enough. Grads are also now facing the possibility student loan rates could skyrocket if Congress can't reach an agreement in the coming weeks.
Should parents and students worry? Based on the passion it's igniting on Capitol Hill, it would appear the answer should be "yes." However, as bad as it sounds, it's actually not something to get worked up about.
Interest rates on federal student loans are set to double by July 1 bringing them to a fixed 6.8 percent.
"It doesn't make any sense to penalize these students and their families by making it double," Rep. John Tierney said.
"They can't buy homes, they can't buy other goods, they can't start small businesses, they can't go to work for startups," Sen. Elizabeth Warren.
Warren and Tierney are arguing not only for students, but for the economy as they outlined a new bill at Northeastern Univ. Monday. The bill is aimed at preventing the rate hike.
College advisor Gregg Cohen agrees with the sentiment that every dollar borrowed is one less spent, but says the impending rate boost is not the students' or the economy's biggest threat.
"Colleges cost $60,000 a year now and that's what's really going to break the bank and the back of the American public," Cohen, President of Campus Bound, said.
The rising rate of education is what is really going to play a role in decisions about higher education, not doubled rates.
"It's not weighing on their minds nearly as much as the overall price tag and financial aid available to them," Cohen added.
The most a student can borrow in a subsidized government loan over four years is $18,000, so the increased interest on a 10-year loan pales in comparison.
The solution, Cohen says, is to find way to bring the tuition cost down, thus borrowing less.
It is entirely possibly in the eleventh hour a decision will be made as it did last year. If a bipartisan effort cannot be made by July 1 rates will return to levels not seen since 2008.