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More bad news for college students as Fed rate hikes leading to higher interest on student loans

More bad news for college students as Fed rate hikes leading to higher interest on student loans

In our current debt based financial system, the banks, as well as the Federal Reserve, continuously need borrowers to to keep the ponzi monetary system going.  And whether it was through the creation of a housing bubble from 2003-2007, or the current bubbles tied to student loans, automobiles, and equities, the moment debt borrowing begins to slow down is the moment the economy rushes full force into the next recession.

Yet despite this need for continuous cheap debt, the central bank has decided to change course and raise interest rates at the same time when the new bubbles appear to be nearing their apexes.  And for a new crop of students looking to borrow incredible amounts of money for their 4-6 year college Degrees, the cost of that money is about to get more expensive.

Snowflakes looking to take out massive student loans for next year to fund the $50,000 price tag of their liberal bastion of choice, and maybe the occasional¬†binge-drinking trip to Cancun for Spring Break, are about to get a little price hike.¬† But, don’t worry, you won’t have to start paying on those loans for at least 4 years.

Beginning in July, interest rates on new federal student loans are set to rise by 0.69%, per data published by the Treasury, which would drive the interest cost of new undergraduate loans up to 4.45% from 3.76% for the academic year ending in June, a nearly 20% increase off an historically low base. Meanwhile, rates on some graduate loans are set to rise from 5.31% to 6% and rates on loans to parents and guardians are due to jump from 6.31% to 7%.  As an example, the cost of a $10,000 loan would increase by about $400, according to an online calculator maintained by РZerohedge

It is quite likely that the incredible rise in costs to attend a four year college over the past decade has been the leading catalyst in the current declines the U.S. is seeing in university enrollment.  Since in both 2015 and 2016, student enrollments declined by 1.3 and 1.4% respectively, and this trend is likely to continue come the fall of 2017.

For an entire generation of Americans, many will spend the next 10 to 20 years paying off their education and be limited in their abilities to afford home ownership, marriage, and especially saving for retirement.  And with interest rates rising in nearly all aspects of consumer credit, those who choose to attend higher education can probably expect to owe a great deal more when they are finished than those who are graduating this spring.

Kenneth Schortgen Jr is a writer for The Daily Economist,,, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.



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