Future of student loan interest rates remains uncertain

College students and recent graduates might not yet be in the hunt for a home or auto loan, but it is likely something that is on the horizon. However, with student loan interest rates on the rise,  those in these groups might be less likely to be approved for a loan.

As reported by the Associated Press, the U.S. Senate will consider a bill this week that would link interest rates to the financial markets. This would create lower interest rates for students starting school in the fall, but they could increase over time. The Obama administration is behind this new idea, but the proposal has many critics who believe that it is a "bait and switch measure."

Massachusetts Senator Elizabeth Warren is one such opponent. She said last week when the proposal was announced that while compromise is not always ideal, this bill is anything but a compromise.

Ann Spoden​, a college student in Iowa, told local news affiliate KCRG that she is worried about her ability to pay back her student loans. Spoden explained that she likes having things planned out, and the current uncertainty about interest rates makes her nervous.

"It would be wonderful if I didn't have to worry about student loans once I got out of here." Spoden said, "I could focus on my future and not necessarily my past."

As lenders work toward determining which potential borrowers are qualified, having as well-rounded a picture as possible can be helpful. That way, hopeful homeowners are not necessarily turned away and financial institutions can still remain profitable.

Through risk assessment software, lenders can accurately narrow down borrowers and make decisions that will benefit their firms in the short- and long-term.

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