Student loan interest rates set to double July 1

March 28, 2013 - 3:28 PM

WASHINGTON (AP) — Incoming college freshmen could end up paying $5,000 more for the same loans their older siblings have, if Congress doesn't keep interest rates from doubling.

If that sounds familiar, it's because the same warning came last year.

But now the presidential election is over, and mandatory budget cuts are taking place. That makes a deal elusive to stop interest rates from doubling on new loans before a July 1 deadline.

Rates would rise from 3.4 percent to 6.8 percent, a $6 billion tab for taxpayers.

Leaders in both parties say they want to dodge the increase. But neither party's budget proposal in Congress has money specifically set aside to keep student loans at their current rate.