The Federal Reserve Board decision to increase interest rates on loans might affect University of Memphis students spending and borrowing in the near future.
The Federal Open Market Committee Tuesday raised interest rates by a quarter of a percentage point to 3.75 percent due to fear of future inflations.
This increase would not do much to original interest rates but can affect loan borrowers of major credit cards and automobile consumers.
"I got credit cards but I keep them paid off," said Michael Carr, an engineering technology major.
For some who have not paid off their credit cards, they would see the quarter increase in the existing terms of automobile loan or credit card.
The officials said that the economy was at a steady pace until Hurricane Katrina hit the Gulf Coast and damages prevailed. Fuel prices might continue to fluctuate, but since Hurricane Rita might be considered one of the worst storms in history, the economy could suffer greatly.
With that in mind, Americans would have to brace themselves for future borrowing of loans and potential debt.
"The way our economy is set up, we have to be prepared for a natural disaster that affects our natural resources," said Genishia Chuck, a nursing major.
The officials said the reason for this 11th increase in interest rates are to protect the economic growth and to minimize the chances of inflation getting out of control.
"Nobody likes to pay more money, but that's just something we have to do," Chuck said.
Since the increase, it brings to question about whether federal student loans would be affected.
Richard Ritzman, director of financial aid, said that by law, the interest rate cannot be raised but once every year on July 1.
"It's definitely something I don't want to go through, but to get an education now, you got to do what you got to do," Chuck said. "That's the price you have to pay for an education."
This year the interest rate increased to 2 percent on July 1. That made the interest rates for Federal Direct Stafford Loans jump to 4.7 percent for students in college and 5.3 percent for students after college.
"My interest rates, albeit credit cards and loans, are already high. Well, I think they're high," said Ayanna Adams, a journalism major. "Maybe I will consolidate my student loans if the interest rates go up on them. Anyway you spin it, I'm going to have to pay."
