Books, Exams and What I Owe

Heading off to college can be one of the most exciting times in a person’s life, especially if it’s your first time living away from home. I still remember the thrill of living with no parents for the first time. That thrill soon wore off when it was time to pay the bills—between books, groceries and my tuition, I didn’t understand how I was supposed to handle it all on my own. Fortunately, student loans showed up to save the day, sort of.

Although student loans made school financially possible, the reality of the debt I was accruing was completely off my radar while I was in school, as it is for many college students. Even with the post-graduation repayment grace period it was still difficult to pull together my loan payments the first few years; I was even one of the lucky ones who found a job the summer after graduation. In today’s economy, and with today’s unemployment rates, it’s a stretch to think that all graduates will find jobs within six months, let alone be on their feet enough to begin repaying their debt. Now, millions of college graduates may see their payments jump.

In less than a month the interest rate on federally subsidized college loans is set to double. Unless Congress decides to freeze current interest rates, more than 7 million Americans will see their annual rates jump from 3.4% to 6.8%. With many already struggling to cover just the interest charges on their loans, this increase is causing quite a stir. Most do not want the rates to rise, but it will cost the United States $6 billion to extend the rates for just one year, according to the Congressional Budget Office.

Have any of your clients expressed concern about the possible interest rate increase? What advice do you give your clients who are currently repaying student loans?

Join us for a live Facebook chat with National Financial Literacy Commission Member Kelley Long, CPA, from 1 to 2 p.m. ET on June 27. Kelley will be joining Feed the Pig spokespig Benjamin Bankes for a live Q&A on student loans. Please feel free to promote to your clients, friends and family.

Claudia L. Cieslak, AICPA Staff. 

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