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Noodle Staff
Noodle Expert Member

October 04, 2021

The debt crisis and the impasse in congress has reached its critical point; Tuesday the government will reach the debt ceiling and spending will be capped.

Most politicians believe Democrats and Republicans will be able to overcome their differences and strike a deal before the deadline. In the unfortunate case this does not occur, the US' debt will be downgraded from its AAA status. This will have short term (and long term) effects on consumer life in America, though most economists believe the economy will be able to bounce back once a deal is made.

At Noodle, we were curious how these issues may affect student loans. A recent NY Times article, predicts that a debt downgrade will result in a rise in the rates on private student loans.

Federal student loans depend on a fixed interest rate so students wouldn't immediately see rising costs. If congress passed legislation to raise interest (which is somewhat likely in the case of hitting debt ceiling) only new loans would be subject to these higher rates.

Are you concerned about your student loans in light of the debt talks and potential credit downgrade? Tell us what you think or ask us questions about your student debt in the comments below.

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