The Federal Reserve made the Sept. 17 decision not to raise interest rates in the United States despite the tumultuous economic pressure from China. An increase in the interest rate would affect student loans.
Loans retain current rates for the time being, but many Fed businessmen believe that the interest rates will be raised before year’s end.
The economic status of the U.S. is not dire, but it remains a work in progress. Thus, the interest rate may yet experience change, and students may feel the impact.
John Williams, president of the Federal Reserve Bank of San Francisco, said in his Sept. 20 speech, “Given the progress we’ve made and continue to make on our goals, I view the next appropriate step as gradually raising interest rates, most likely starting sometime later this year.”
The Fed is set to meet two more times this year, once in October and again in December, which means that there are two more opportunities for the Fed to raise the rate.
Altering interest rates may create instability in the international market, leading to further damage in the U.S. Fed officials are hesitant to take that risk.
If the rate is raised, the same officials believe the current balanced unemployment of 5.1 percent may drop further, thus spurring domestic economic growth according to Fed officials.
These possibilities and more will affect the upcoming decisions.
What will an interest rates increase mean for students?
According to Julia Frankland, professor of business administration, the impact will be minimal.
“The federal funds will only increase the rates about .25 percent, and as a student, you would hardly even notice,”
Frankland said. “The mortgage rates may go up more, or the rates of car loans, but for student loans, you will
hardly notice it.”
This is good news for students all around. They are encouraged to keep up with the economic trends, as an abrupt
change is something to be wary of.
Joshua Myers is a writer for the Aviso