On average, those students carried $21,331 in debt at graduation.
Increasing the interest rate on subsidized Stafford loans is particularly dangerous because it targets students who need the most assistance, said Frank Palmasani, a college admissions adviser. Palmasani, a former director of admissions at Lewis University in suburban Chicago, is the developer of Financial Fit, a college affordability program.
Federal Stafford loans are available in two forms — subsidized and unsubsidized. While unsubsidized loans are available to undergraduate, graduate or professional students, regardless of need, students must demonstrate financial need to qualify for subsidized loans.
Monday's interest rate increase applies only to subsidized Stafford loans. Unsubsidized Stafford loans and other federal programs like Perkins loans won't be affected.
Because the increase applies only to subsidized Stafford loans, the heaviest impact will fall on the neediest families, Palmasani said.
“You're targeting, really, families who have the least capacity to repay,” he said.
Whether or not Congress reinstates the lower interest rate, Palmasani said, it's important that prospective college students have reasonable expectations for how much their families can afford to pay for college.
Instead of just looking at the published price tag, he said students should consider the net price — the cost students should expect to pay after scholarships, grants and a reasonable amount of borrowing.
In the past, Palmasani said, students often selected a college based on their own wishes, without taking the net price into account. But as the cost of higher education climbs, that method of choosing a school isn't viable anymore, he said.
“This is just not functional anymore,” Palmasani said. “We just can't do it that way.”