An estimated 40,000 Rhode Island students will face rising loan bills without action this week from Congress. Senate Democrats and Republicans are looking for a way to avoid the increase, but if they fail to reach a compromise, interest rates on subsidized federal Stafford loans will double on July 1st, rising from 3.4 percent to 6.8 percent.
The average college student in Rhode Island borrows roughly $25,000 from the federal government to help pay for a college degree, slightly higher than the national average. Federal loans have advantages over private loans, but Rhode Island Student Loan Authority Executive Director Charlie Kelley says the federal government has been chipping away at those benefits in recent years.
“Fees have gone up, the feds have also cut back on federal Pell grants, particularly for summer students, there is no longer a subsidized Stafford loan for graduate students,” Kelley said.
The Rhode Island Student Loan Authority has seen an increase in families seeking help with college costs this year. Kelley says 13,000 families have used the agency’s college planning centers over the last year, compared with 11,000 the prior year. He estimates that on top of the loans students take out, parents are borrowing an average of $10,000 for the first year of college alone.