Student loans 101: What's at stake in D.C. feud over college loan subsidy?

Interest rates are set to double on certain federal student loans, if Congress and President Obama don't agree on a fix by July 1. Who would be affected? How did we get here in the first place? Here are answers to five key questions.

By , Staff writer

3. How will the rate change affect borrowers if Congress and the president don't act by July 1?

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    House Speaker John Boehner, accompanied by House Education and the Workforce Committee Chairman Rep. John Kline (R) of Minnesota, left, and Rep. Jeb Hensarling (R) of Texas, speak recently about a student loans bill on Capitol Hill in Washington.
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Loans that students have already received will have a 3.4 percent interest rate for the life of the loan. But newly issued loans will have a rate of 6.8 percent.

For students who borrow the maximum $5,500 in the coming school year, the rate change to 6.8 percent would mean paying an additional $9 a month once they start repaying the loan, according to Jason Delisle, director of the Federal Education Budget Project at the New America Foundation, a nonpartisan policy organization in Washington.

But interest doesn’t start accruing on these loans while the student is in school, and graduates who are unemployed have up to three years before interest kicks in, Mr. Delisle says. 

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