Prince, a 2010 Widener graduate, makes most recent college graduates look reckless - she has already paid off her $32,000 in school loans.
"I lived with my parents and paid them some rent," says Prince, who started working in alumni relations at Widener six months after she graduated (in three years instead of four). She went without a cellphone or car, and stayed in on weekends. "I put everything into paying off my loans," she says.
She knows she is an exception.
The loans affected by the rate increase are subsidized Stafford loans, available to low- to moderate-income students. The federal government pays the interest on these loans until the student graduates. The student has from 10 to 25 years to pay off the loan.
Although more than 7.4 million students take advantage of the subsidized Stafford loans, the amount they can borrow is limited to $13,500 over three years.
The rate increase would cost those who borrow the maximum an extra $4,500. Graduates of four-year colleges leave school with an average debt of $29,000.
Financial aid directors at colleges and universities in the Philadelphia region say any increase in student debt, even relatively small, can make a college education unaffordable.
"Nationally, many students are using this loan as their first option to pay for their education, so an interest rate change is very important," says Joel Carstens, university director of financial aid at the University of Pennsylvania. "And for students who have the highest financial need, they are the most at risk to stop their education and/or not pursue an education beyond high school at all."
Penn has a grant-only policy, so students in financial need do not have to take out loans. Nevertheless, Carstens said, some students apply for Stafford loans to pick up extra costs, such as health insurance, that the university does not cover.
Both political parties have been posturing over the last few days on the issue, which some higher education experts say is more symbolic than financial.
Democrats set the 3.4 percent rate in 2011. Last summer, two days before it was set to expire, Republicans agreed to extend it for one year. The rate for unsubsidized Stafford loans was already fixed at 6.8 percent and has not changed.
The increase went into effect during a relative lull in the academic year, said David Glezerman, vice president and bursar at Temple University. Until Congress makes a decision about the pending legislation, Glezerman said, students are in financial limbo.
"It's fairly difficult to say what will happen," Glezerman said. "So we're advising students that if they haven't applied for federal loans yet, they should wait a couple of days and see what happens. It really is swirling right now with the different proposals out there."
David Baime, senior vice president for government relations at the American Association of Community Colleges, said that while the rate increase will undoubtedly increase the burden on students, the focus should be on the soaring costs of college.
Pennsylvania's 14 public universities just raised tuition 3 percent. That brings the annual tuition cost for in-state residents to $6,622. The increase in cost comes at a time the schools just received $413 million in state aid, which covers only about a quarter of their operating costs.
"We think that while the terms and conditions of loans do matter a lot, the issue of how much students are borrowing matters more," Baime said.
Is that being addressed?
"Not at all."
Contact Melissa Dribben at 215-854-2590 or firstname.lastname@example.org or @dribbenonphilly.