New student loan rates means changes for area banks and local students
College students are facing higher interest rates on federal student loans and more banks are bowing out of the student loan business.
Officials tell us 50% to 60% of Missouri Southern State University students seek loans at the university financial aid office. Now they’ll be paying 6.8% interest, double the old rate.
Officials say it’s still a better option than banks, many of which are halting student loan offerings.
The financial aid director says government loans can be easy to get but higher interest could make students smarter with what they borrow.
“Hopefully it will make students think about the costs of what they’re borrowing and if they need all that they’re being offered that they might pare it down a little bit, take a little bit less – think about making interest payments while they’re in school,” says MSSU Financial Aid Director Becca Diskin.
U.S. Bancorp is pulling out of the private student loans market and JP Morgan Chase is reducing its lending for students. Local Commerce Bank officials say they’ll stop making student loans as well.
A lot of members of Congress hope to restore lower rates for federal student loans when they return from the holiday. Supporters want to roll back the rate before college students start signing loan documents this fall.