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Student loan rate set to double on Monday

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The interest rate on a federal loan available to low-income students is scheduled to double on Monday to 6.8 percent because Congress was unable to agree on a long-term fix or temporary extension before adjourning for the holiday recess.

The rate hike on federally subsidized Stafford loans — the largest federal student aid program — has been looming for a year since Congress struck a temporary deal amid the presidential race to keep rates at 3.4 percent until July 1.

The increase will impact more than 7 million students receiving new loans for the upcoming school year. Without a congressional fix, the average student would end up paying an extra $25 per month, or up to $3,000 more over the life of the loan.

A compromise could be reached before students are impacted because most loans will not be dispersed until the fall, buying Congress more time. The Senate is expected to vote on July 10 whether to consider a Democratic bill that would extend the current rate for one more year, with any future agreement to be retroactive.

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