This as thousands of students gear up to go back to school in just a few weeks.
On Friday, more than a dozen community, state and University of California college officials joined Representative Jim Costa in downtown Fresno to urge our nation's leaders to lower interest rates for student loans.
"We cannot keep setting our students up for these interest rate loan cliffs every year," said Costa. "Congress must act and we must act sooner than later."
He said when Congress failed to act two weeks ago, interest rates on new direct subsidized loans doubled from 3.4% to 6.8%. An increase students said could cost them up to $4,000 in additional interest over the life of their loans.
School leaders like Fresno State Assistant Vice Chancellor of Student Affairs Paul Oliaro, believe families could be greatly impacted if Congress doesn't reach an agreement soon.
"Together we're trying to make that case to Congress that you've got to act, you've got to bring that loan rate back down to the 3.4% and you've got to make higher education affordable," he said.
Incoming Fresno State Student President Moses Menchaca agreed. Menchaca is a first generation college student from the Central Valley who took out a loan to help his parents afford tuition. He said the instability of interest rates is putting a financial burden on the shoulders of students who are already struggling to pay for college.
"One of the problems I'm facing now is that I am not aware of what the interest rates are going to be like, how much money that's going to be and in all honesty, I think the bigger issue is the financial literacy of students at our campus," he said. "Not many students know what loans they are getting into and the burden this may play not only during school, but after."
The situation is particularly worrisome for students at UC Merced where 87% of the student body receives some sort of financial aid and the typical graduate leaves the university with about $18,000 in debt.
Assistant Vice Chancellor of Student Affairs J. Michael Thompson said, with school starting in next month, the University can't wait any longer and will change new interest rates starting Monday.
"Time is of the essence," said Thompson. "For instance, we have not originated any student loans for the fall term in hopes Congress would be able to address this issue and solidify a low interest rate for students. However, come Monday, we have to originate loans because school starts in just a few weeks."
That means UC Merced would be among the first to put out loans at the 6.8% interest rate. Thompson said the good news is those rates can later be changed if congress reaches an agreement.
If Congress fails to address the issue, as many as seven million people taking out new student loans this year will be hit with the higher rate.
