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MSU Staff & Students Comment on Student Loans Interest Rate Hike

<span style="font-size: x-small; line-height: 1.3em;">Around seven million students in the U.S. depend on student loans to go to college.&nbsp;</span><span style="font-size: x-small; line-height: 1.3em;">But today, the cost of paying off one type of student loan dramatically increased.</span>

As of today, the interest rate on new federally subsidized Stafford Loans has doubled.

The rate jumped from 3.4% to 6.8%, which financial aid experts say will add an average $2,600 dollars cost to a student's loan.

Students sounded off at the nation's capitol upset that lawmakers failed to reach a deal to keep college loans rates from doubling.

But at MSU, students either haven't realized yet how much more a loan will cost or are accepting it with quiet frustration.

"I won't say that the phones haven't been ringing at all cause they have been and we've had students who have been asking about it but I don't know what I expected but it hasn't been as bad as I thought it was going to be," says Kathy Pennartz, financial aid director at MSU.

Still, the doubling of interest rates on new federally subsidized Stafford student loans is not sitting well with some parents, who worry the higher cost could keep kids from going to college.

"If they don't get financial aid, getting in debt is gonna be a burden for them when they graduate college and that might put something in their mind that... I'm not gonna go to college now cause I'm gonna have a big debt when I graduate," says Luis Tejada, a concerned parent.

But MSU junior, Ruth Aladenika, is taking the hike in stride.

"You just have to take it without a choice cause that's the only way we can go to school," says Aladenika.

At MSU, about 65% of students have financial aid, loans or both and the the total value of loans has been going up year after year.

For the 2008--2009 school year, when the economy started its downward spiral, MSU financial aid officials say $24 million in student loans were awarded to students.

The following year that amount increased to $27 million and has continued climbing.

"Obviously the subsidized loan is the better loan for a student to have simply because during their four or five years of college the federal government is subsidizing that loan. There isn't any kind of interest that's accruing on that particular loan," explains Pennartz.

But now that congress failed to reach a deal, the subsidized Stafford Loans will cost more.

There is still time for congress to act on this.

Next week lawmakers could pass a proposal that would retroactively lower the rates, but only for one year.

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