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Interest Rates Rise On Student Loans Despite Increase In Defaults

By Kim Glovas

PHILADELPHIA (CBS) -- Interest rates on new federally subsidized Stafford loans were set to double Monday after Congress failed to act before the deadline. That means more debt for college students.

Right now, there is $1.2 trillion in federal student loan debt in the United States and the default rate is on the rise. Doctor Wesley Leckrone, professor of political science at Widener University, says graduating, but being underemployed means students can't pay back loans. But there's something worse.

"If you come out with a college degree, your income is about 68-percent higher than if you don't have a degree," Leckrone says, "which means students who go to college, don't complete college, but come out with student loans are the most likely to default, because they don't have the skills to get a well paying job that's going to allow them to pay the loan back."

Leckrone says the only reason senators couldn't reach agreement was partisan bickering and each side wanted to make the other side look bad. Now, the Senate will take up the issue on July 10th.

Hear more of the interview with Dr. Wesley Leckrone in this CBS Philly podcast:

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