By Azariah Long
Student loan interest rates will increase to 12 percent, an all-time high, under President Donald Trump.
Trump is making changes to subsidized loans in college education.
President Trump believes the U.S. federal government should not help students pay back their loans because the government could use federal funding to make more jobs and health care in the U.S.
“Subsided loans are when the government pays for the interest while they are in school,” Genny Munoz, CPP’s loans specialist said.
“The student has the option to pay the interest while they’re in school or after they are out of school.”
In addition, the Trump administration believes in eliminating the public service loan forgiveness program, a program that forgives the remaining balance on a direct loan after you have made 120 monthly payments under a repayment plan while working full-time for a qualifying employer.
According to CPP’s financial aid office, between July 1, 2016, and June 30, 2017, the interest rate was 3.76 percent.
However, as of July 1, 2017, the interest rate for undergraduate student has increased to 4.45 percent.
The origination fee was at 3.204 percent, but increased to 3.207 percent.
An origination fee is when the lender must pay charged fee when entering a loan agreement in the process of signing off on a loan.
For grad students, CAPP’s Financial Office reported the interest rates were 5.31 percent, and now they are 6.00 percent.
The origination fees are the same as undergraduate students.
This means instead of a student paying $375 a month in loan repayment, he or she would have to pay $500 a month because the government assumes students should be able to give the money back as soon as they come out of college.
Furthermore, if a CPP student decides to apply for a student loan out of his or her bank, the interest rate will be higher and will cost more for them to pay them back. Bank loans rates are at 6 percent in interest per month, which is higher than CPP’s loans.
“Students should be aware that taking money out for loans from the banks is the not the best decision but should go through our school to get loans out because of the low interest rates,” Joy Tafarella, CPP’s federal credit union vice president, said.
In the last couple of years, loan interest has not increased.
However, by the end of Trump’s first four years, student loans interest rates could increase up to 7.5 percent.
This an average of 3.05 percent more than the size of the loans is right now and according to the Student Debt relief website, if Trump runs for another term in 2020, student loans could increase from 10 to 12.5 percent.
Courtesy of studentaid.gov
College graduates owe approximately $24,000 in student loan debt upon finishing their degree
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