University of Wisconsin-Madison students may soon find themselves with emptier pockets after federal student loan rates nearly doubled to 6.8 percent Monday.
Congressional inaction resulted in the hike in interest rates for federal Stafford loan holders. According to UW Financial Aid Director Susan Fischer, 8,973 undergraduates on campus currently hold those loans, resulting in $38.6 million in federal aid for those students. Senior Emily Wiersema is one of those students, and she has spent her summer working three jobs to help pay off her nearly $30,000 in student debt.
"I'm working over 40 hours doing what I can," Wiersema said. "It's kind of just living this paycheck-to-paycheck lifestyle."
Wiersema said she has spent her undergraduate career juggling part-time jobs and full-time school in an effort to pay for college.
"You're so concerned with how you’re going to pay for it, sometimes school and homework take a backburner," she said.
While loan repayments are a daunting reality for Wiersema and countless other UW students, Fischer said she’s confident the federal rate hike won’t be.
"I don't think it's going to stick," Fischer said of the interest rate increase. "I think there’s enough support from Congress on both sides of the aisle and there’s many proposals out there to make it so that 6.8 percent will not stay in place."
Whether loan rates dramatically increase now or in the future, Wiersema said she's still concerned about standing on her own two feet.
"I don't want this crippling debt that's going to cause problems for the rest of my life," she said.
Edward Jones Financial Advisor Kristen Carreira said for students and their parents thinking about college down the road, there’s never a better time to start saving than now.
"Starting young is huge, even if you can just put in a few dollars every month," she said.
Even though the higher interest rate is in place as of Monday, Congress could still retroactively pass legislation to bring those rates back down to 3.4 percent.