College students who plan to take out a student loan for the fall term could end up paying a higher interest rate unless Congress acts soon.
Effective Monday, interest rates on subsidized Stafford Loans increased from 3.4 percent to 6.8 percent.
The increase only affects new student loans; subsidized loans taken out before Monday were not affected.
The increase will tack on an extra $2,600 to the bill paid by students, according to Congress' Joint Economic Committee.
During last year's presidential race, both Democrats and Republicans said the 3.4 percent interest rates should be extended another year, but the parties didn't reach an agreement before leaving Washington, D.C., last week.
Senators have said they plan to revisit the issue when legislators return from holiday break.
If they vote to extend the 3.4 percent rate, it would be retroactive to Monday.
"Paying for college is a major burden for families and students, and Congress shouldn't add to that by allowing the interest rate on student loans to double," said U.S. Sen. Bob Casey, D-Pa.
Sen. Pat Toomey, R-Pa., opposes an extension and said the focus should be on controlling the rising cost of education.
Even if Congress can't reach an agreement and the interest rate increase remains, the effect might be minimal at York College.
"I don't anticipate much of an impact on enrollment," said Ed Lane, assistant director of financial aid at York College.
Federal loans contribute a small amount to student aid, he said.
For example, freshmen are eligible for up to $5,500 in federal loans, and just $3,500 of that can be in the form of subsidized loans, Lane said.
The interest rate on subsidized student loans was 6.8 percent six years ago, and it didn't have much of an impact, he said.
Concerns: Leaders at Penn State had a different view.
"Obviously a higher interest rate is disappointing news for students and families struggling to make ends meet and gain an education. It would be difficult to predict the overall impact, but it is safe to say that this might deter a number of students from continuing their education," said Lisa Power, director of public information at Penn State.
The rate increase will definitely add to a student's debt at graduation, she said.
"Accumulating more debt certainly hurts any new graduates," Power said.
In 2011-12, the number of Penn State undergraduates receiving federal loans was 49,045. Of those undergraduates, 41,871 students received a federal subsidized Stafford loan, according to the university's office of student aid.
The average loan amount per student was $4,060.
A doubled interest rate would cause an increase of $138 in interest accrual alone this year, the student aid office reported.
More than 7 million students across the U.S. are expected to take out subsidized loans this year, according to the Congressional Budget Office.
To ease their financial burden, Sen. Tom Harkin, D-Iowa, Democratic chairman of the Senate education panel, urged lawmakers to extend the 3.4 percent rate when they return next week.
-- Candy Woodall can also be reached at firstname.lastname@example.org. The Associated Press con tributed to this report.