Student Loan Interest Rates Will Double If Lawmakers Don't Reach Compromise

SACRAMENTO (CBS13) - The cost of college could skyrocket for millions of students if lawmakers don't reach a deal by Monday.

If a compromise isn't reached, about 7 million students will see their student loan interest rates jump. So if you're borrowing $27,000 in student loans, then you'll end up paying $5,000 more in interest over a 10 year period.

"That's ridiculous. I don't know how any of us are going to do that," said one Sacramento State student.

"I don't want to be 45 and still paying student loans," said another.

Students at the university say they are already fighting rising tuition costs, and any more on their plate could prevent them from reaching their academic and career goals.

"These students have had to take on more and more debt to pay for this investment," President Obama said.

Interest rates for need-based or subsidized federal Stafford loans will go from 3.4 percent to 6.8 percent Monday, unless congress intervenes.

"Just to hear that congress can't come up with a solution is really disheartening," a Sacramento State student said.

The higher interest rate would generate $36 billion in revenue this year, during a time when congress is scrambling for cash.

"My guess is they may just kick the can down the road and say 'we'll just do this for one year and we'll revisit it another year later,' Kalman Chany, author of "Paying for College Without Going Broke," told CNN.

If congress can't come up with a compromise, then students like Dreana Corner say the increase could also cripple their future credit.

"It's definitely stressful when you think about trying to get a house later, trying to get a car. Cause it's messing up your credit score if you can't afford to pay those back on time, and it's forcing a lot of people to stay in school longer just to keep the loans off their back," said Corner.

Meanwhile, others say if they want to compete in an already competitive job market, they really have no choice.

"The value of having a higher education is still important and if that's what the cost is, then I'd be willing to pay it. Cause it definitely pays off in the future," one student said.

Some lawmakers want to keep rates at the lower 3.4 percent for the next couple of years while others say student loan interest rates should be allowed to fluctuate according to market demands.

American college graduates owe more than $1 trillion in student loans.

The rate increase does not apply to existing loans.