Student loans are about to get more expensive.
Interest rates on loans will double from 3.4 percent to 6.8 percent for more than 7 million students on Monday after Congress failed to pass legislation to prevent the automatic rate hike, according to Credit.com.
Any students taking or renewing subsidized Stafford loans after July 1 will pay up to $3,000 more on a $23,000 loan that's more than 10 years.
“The increase impacts the subsidized Stafford rates, which will now double to 6.8 percent -- equal to that of the unsubsidized Stafford loans,” Mitchell Weiss, a Credit.com student debt expert, said in a statement.
Weiss blamed House Republicans for passing the Smarter Solutions for Students Act on May 23, which ties student loan interest rates to market-based rates. It would have reset student loan rates each year, depending on U.S. Treasuries rates, but Senate Democrats said it was too uncertain.
“Although the population of subsidized borrowers is smaller and the House can certainly act to remedy the situation retroactively,” Weiss said, “I’m actually more concerned about the series of House and Senate proposals that would index all student loan interest to the wrong Treasury note while subjecting the ensuing rate to an unreasonably high mark-up that’s intended to cover administrative costs that have yet to be vetted.”