Increasing Student Loan Rates
Will Harm Minorities, Experts Say
Some interest rates may increase by 2 percentage points.
By Charles Dervarics
For Carmen Berkley, an African-American student leader with five college loans and some knowledge of the financial aid system, the large increase in student loan interest rates on July 1 is still a little bewildering.
“It’s very daunting, and I still don’t understand it. I don’t think a lot of students understand,” says the University of Pittsburgh senior who worked with a national lobby group in Washington, D.C., to protect student interests. She is besieged by advertisings and mailings urging her to consolidate her various loans, which total more than $50,000. And, the ads say, she should do this before the July 1 rate increases on Stafford student loans and parent PLUS loans.
Berkley and thousands of other college students will have to come to grips with a shifting student loan market. Gone are the low interest rates of recent years, replaced by higher variable rates that will add up to larger repayments after students leave school.
“We’ve had a solid decade of happy news on interest rates,” says Barmak Nassirian, associate executive director of the American Association of Collegiate Registrars and Admissions Officers. “That’s coming to an end.”
For minority students, the rate increase may also increase their reticence about incurring large college loan debts.
