When Pitman High School graduate Gabbie Khasha walked to the podium to receive her diploma, she thought she was taking the first step on the path to higher education. But as her college starting date approaches, the financial burden and reality of the cost of tuition is throwing a roadblock in her future.
Khasha, who will be attending California State University, Stanislaus this fall as a freshman, is one of millions of students nationwide who rely on subsidized loans to pay for tuition. Interest rates on subsidized Stafford loans doubled to 6.8 percent this month, after the Senate failed to reach an agreement to avoid increases.
Khasha is more fortunate than many. Her parents decided to step in so she won't graduate college with a mountain of debt.
“The numbers are staggering,” said Khasha. “My family saved some money when I was young to pay for my higher education, but this loan increase, it’s still going to take a toll on their finances.
“I don’t know how they’re going to do it,” she said. "I’m also going to do whatever I can to help take the burden off of them and help pay for my tuition."
But for CSU Stanislaus alumni Jose Chavez, who is currently pursuing his masters in mechanical engineering at Cal State Fullerton, there was no other alternative for him than to take out subsidized loans regardless of the rate increase.
“It’s upsetting,” said Chavez. “When I started my undergraduate degree the subsidized loan [interest rate] was little over 3 percent. After making calculations, I'll be paying thousands of dollars in interest rates.”
With the nation’s student loan debt at nearly $1 trillion, the heavy burden of college costs is about to get even worse.
“The student loan debt is starting to look a lot like the housing market,” said Chavez. “It’s a balloon ready to pop and cause more financial problems for the country.”
For those who borrow the maximum amount and pay back their loans over 10 years, the added cost would amount to $4,000, according to the Institute for College Access & Success.
“My student loans haunt me,” said Chavez. “I lose sleep at night just thinking of them and how long it’s going to take me to pay them off."