Interest rates on some federal student loans double, causing concern among Oklahoma students

Instead of spending her final semester as an undergraduate on campus in Edmond, University of Central Oklahoma student Amy Watkins will be on a ship in the middle of the Atlantic Ocean. But when it comes time to pay for the program, Watkins could see a bigger bill than she originally expected.
by Silas Allen Published: July 2, 2013

Instead of spending her final semester as an undergraduate on campus in Edmond, University of Central Oklahoma student Amy Watkins will be on a ship in the middle of the Atlantic Ocean.

But when it comes time to pay for the program, Watkins could see a bigger bill than she originally expected.

During the upcoming fall semester, Watkins, 22, will be enrolling in Semester at Sea, a program in which students receive college credit for spending a semester aboard a passenger ship. The program is sponsored by the University of Virginia.

Although she received scholarships to cover most of the cost of the program, Watkins plans to take out federally subsidized student loans to pay for the rest.

Interest rates on new federally subsidized Stafford loans doubled, climbing from 3.4 percent to 6.8 percent, as lawmakers failed to reach an agreement to prevent the increase by the July 1 deadline. Although the deadline has passed, Congress could vote to restore the lower rates when lawmakers return after the July 4 holiday.

The increase carries an estimated cost of $2,600 over the life of the loan for the average borrower, according to a recent report from Congress' Joint Economic Committee.

Students who borrow the maximum allowed amount will see an estimated cost increase of $4,500, according to the report, which was released last month.

According to the report, a higher rate of student debt influences borrowers' life choices after graduation. Many feel pressure to avoid lower-paying careers in education, the arts or public service, instead seeking out higher-paying positions that would allow them to pay off their loans.

Watkins has about $14,000 in student debt. Most of her tuition and fees are covered by scholarships, but she uses loans to cover other opportunities, including a semester she spent in UCO's study abroad program in Wales.

Watkins said she's concerned about how her student debt will affect her career choices after graduation. She hopes to use the Semester at Sea program as a way to break into a career in travel writing. But she's worried it might not be possible, she said.

“My biggest fear is that I'll have to take a job I hate to pay my loans,” Watkins said.


by Silas Allen
General Assignment/Breaking News Reporter
Silas Allen is a news reporter for The Oklahoman. He is a Missouri native and a 2008 graduate of the University of Missouri.
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