President Barack Obama’s State of the Union speech Tuesday night may be causing anxiety for families with college-bound students. In addressing the rapidly rising cost of higher education, Obama noted that the fixed interest rates on student loans are set to double in July if Congress fails to act.
Here’s what’s behind the change referenced by Obama:
THE BASICS
There are primarily two types of federal student loans: subsidized and unsubsidized. The difference is that the government doesn’t start charging interest on subsidized loan until the student graduates.
With unsubsidized loans, by contrast, interest starts accruing right away. That can tack a considerable amount on to the initial loan amount by the time the student graduates and starts paying off the debt.
Borrowers also pay a different interest rate when
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