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Student Loan Interest Rates Double

MIAMI (CBSMiami) – Politicians of both parties talk about the importance of higher education, but Monday the intransigence of both parties made it even more difficult and expensive for some students to get a degree.

Monday, the interest rate on government-backed student loans skyrocketed from 3.4 to 6.8 percent. The rate hike had been avoided for a few years thanks to last-minute deals in Congress, but no such deal emerged this year.

The rate hike hit approximately 7 million students looking to advance their education in community colleges, colleges, and universities. The rate hike also comes at a time when the overall student loan market is beginning to loom over a sputtering economy.

Across the nation, a cumulative $1.2 trillion is held in student loan debt by current and former students. Most of the debt is not paid on time and the federal government has said it's not helping unless Congress acts first.

Democrats want to tie rates to short-term borrowing costs to the federal government, which can be very small. Republicans and the White House plans tie the interest rate to the rate paid on 10-year treasury notes.

As the student loan crisis begins to take shape, the company much of the loans have been sold to, Sallie Mae, and the federal government are making billions.

Just over the last five fiscal years, the federal government has made approximately $120 billion in profits from students and their families borrowing to finance a chance at a higher education.

The rate hike hit the state of Florida especially hard. According to CBS4 news partner the Miami Herald, Florida International University is in the top 20 of students impacted by the July 1 rate hike. A total of 13,750 students at FIU will be impacted, according to the Herald.

According to Congress' Joint Economic Committee, the estimated additional cost for the average student due to the rate hike will be roughly $2,600.

Graduating students in the state of Florida will face an average of $23,054 in student loan debt, many times, more than their first job will pay in a depressed economy.

(TM and © Copyright 2013 CBS Radio Inc. and its relevant subsidiaries. CBS RADIO and EYE Logo TM and Copyright 2013 CBS Broadcasting Inc. Used under license. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Miami Herald and Associated Press contributed to this report.)

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