Jump in Student-Loan Interest Rates Will Cost Colleges, Too

By Lee Gardner. In addition to the increased costs for borrowers and the possible political costs for Congress, the doubling of interest rates on federally subsidized student loans could cost colleges, too, according to a report released on Monday.
By letting the rate on the student loans rise from 3.4 percent to 6.8 percent, effective on Monday, Congress created a “credit negative” for American colleges, according to the report from Moody’s Investors Service, which rates debt securities. In its weekly report to subscribers, Moody’s analysts said that the higher interest rate will increase “the cost of student borrowing at a time when many tuition-dependent colleges are already struggling to maintain enrollment and grow revenue.” Read more...