Student loan rate hike: What you need to know
Congress has until July 1 to extend current low rates on subsidized student loans for more than 7 million undergraduates.
April 24th, 2012
04:39 PM ET

Student loan rate hike: What you need to know

By Jennifer Liberto @CNNMoney

WASHINGTON (CNNMoney) - On July 1, the interest rates on student loans subsidized by Uncle Sam will double to 6.8%.

The upshot? Students taking out loans for the next school year will have to dig deeper in their pockets to pay them off. Unless Congress steps in to stop the increase from going forward.

The issue has become a political talking point. President Obama, who called for congressional action in his State of the Union speech in January, is using the issue to stump for votes.

His Republican rival Mitt Romney says he, too, believes Congress should step in.

What's at stake: More than 7 million undergraduates have subsidized student loans, which means the federal government absorbs some of the interest rate for lower- and middle-income families based on financial need.

If Congress does nothing, the cost to students borrowing the maximum $23,000 in subsidized loans is an extra $5,000 over a 10-year repayment period. The cost to the federal government to extend the lower interest rate is $5.8 billion, according to an analysis by the nonpartisan Congressional Budget Office.

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Obama pushes to keep low student loan rates
"We have to educate our way to a better economy," education secretary Arne Duncan said Friday.
April 20th, 2012
04:53 PM ET

Obama pushes to keep low student loan rates

By Jennifer Liberto, CNNMoney

WASHINGTON (CNNMoney) - President Obama will use his bully pulpit to urge lawmakers to prevent a doubling of interest rates on federally subsidized student loans.

On July 1, the interest rate on federal subsidized loans will go from 3.4% to 6.8%. That means students taking out loans for the next school year will have to dig deeper in their pockets to pay them off.

"If we want to keep jobs in our country, we have to have an educated work force," Secretary of Education Arne Duncan said Friday. "We have to educate our way to a better economy."

More than 7 million undergraduates have subsidized student loans, which means the federal government absorbs some of the interest rate for lower- and middle-income families based on financial need.

If Congress does nothing, the cost to students borrowing the maximum $23,000 in subsidized loans is an extra $5,000 over a 10-year repayment period.

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Living near good schools will cost an extra $200K
April 19th, 2012
06:04 PM ET

Living near good schools will cost an extra $200K

By Tami Luhby, CNNMoney

(CNNMoney) - Want to live in a good school district? It'll cost you an extra $200k.

Home values are $205,000 higher, on average, in neighborhoods with high-scoring public schools versus schools with low scores, according to a new report issued by the Brookings Institution.

Homes in high-scoring neighborhoods typically have 1.5 additional rooms, and 30% fewer are rented, the study found. Housing costs average $11,000 more per year in areas with better schools.

Some of the areas with largest differences in housing costs also have the widest gaps in school test scores. The Bridgeport-Stamford-Norwalk metro area in Connecticut, for instance, has both the widest gap in test scores between higher-income and lower-income neighborhood schools and the largest difference in housing costs, at $25,000.

Not surprisingly, income has an impact on test scores. The average low-income student attends a school that scores at the 42nd percentile on state exams, while the average middle/high-income student goes to schools that score at the 61st percentile.

Poor students have become more concentrated in schools with other poor students since 1998, Brookings found. The average low-income student attends a school where 64% of fellow students are low-income, though they represent only 48% of all U.S. public school students. The percentage of economically integrated schools is less than 7%.

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