7 Million Students Brace For Surge In Loan Rates

By Jennifer Liberto @CNNMoney

On July 1, the interest rates on student loans subsidized by Uncle Sam will most likely double to 6.8%.

Congress and the White House agree that something should be done to prevent that. They don’t agree on what.

The Republican-controlled House passed a bill last week that would stop the rates — lowered by Congress six years ago — from doubling now, but would allow them to rise later. However, President Obama vowed to veto it, calling it the “wrong approach.”

So the odds are about 7 million students taking out subsidized loans for the next school year will pay more to pay them off.

“Nothing will happen. They won’t agree,” said Matthew Chingos, an education policy fellow at the Brookings Institution. “And the rate will sunset back to 6.8%.”

Related: Class of 2013 grads average $35,200 in total debt

The rate hike will only affect a third of all undergraduate students who have subsidized loans, in which the federal government absorbs some of the interest rate. Those are awarded based on economic need.

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