Eastern New Mexico University student Alesha Jones is grateful that she doesn’t have to take a second job while she pursues her degree in communication disorders.
Christina Calloway: Portales News-Tribune
Student worker Alesha Jones, 20, does inventory Monday morning in Eastern New Mexico University’s Golden Library. She says she’ll be able to rest easier knowing the interest rate on her student loans will not increase.
Jones, 20, of Willcox, Ariz., who has plans to get a master’s degree in speech therapy, has taken out two federal loans since she’s been attending ENMU.
She, along with 1,600 ENMU students and millions across the U.S., have been spared an interest rate hike on a popular federal loan that would have doubled the amount of interest on the loan.
Congress passed a transportation bill in late June that included a key provision on student loans that will temporarily maintain the subsidized Stafford loan interest rate at 3.4 percent until June of 2013. President Barack Obama signed the bill into law Friday.
The interest rate was scheduled to double July 1 to 6.8 percent, a change that was set in place about four years ago.
“It probably would have cause me to get a second job and I’m working one now just to pay off this loan,” said Jones about the possibility of an increase. “It would have caused extra stress.”
ENMU Financial Aid Director Brent Small said the student impact would have been significant had the increase taken place.
“Students would have repaid an average of $1,000 more in interest during the life of their loan,” Small said. “Unless there’s legislation that goes through next year, (the interest rate) will go back to 6.8 percent in July of 2013 indefinitely.”
According to Small, if Congress continues to maintain the interest rate at 3.4 percent, future college students would not be hit with a larger increase because federal loans have a cap of 9 percent.
“More students are informed now,” Small said. “I think they should be concerned with the interest rates of their loans.”
April Chavez, financial aid director of Clovis Community College, is happy that CCC student won’t have to pay the extra money on loans to fund their education.
“I think it’s a great thing for our students to remain at that interest rate, just because that’s quite a bit of debt,” Chavez said.
Approximately 400 students at CCC borrow the subsidized Stafford loan, according to Chavez.
“On the back end, with students having to pay twice as much as interest, their payments would be higher,” Chavez said.
She says another extension of interest rate is hard to predict and usually has to do with the federal government and its agenda.
“We’re just waiting to see what happens next and we’ll keep students updated,” Chavez said.
Small added that students should be aware of other provisions in the bill that include limiting subsidized loan eligibility.
Lawmakers agreed to permanently limit the eligibility for subsidized loans to 150 percent of the length of the student’s academic program, according to the National Association of Student Financial Aid Administrators.
That means students in a four-year program will be eligible for the loan for the equivalent of six years, and three years for students in a two-year program.
“This motivates students to finish programs faster,” Small said.
In addition to loans, Small reminds students of the other ways to pay for school without repercussions.
“Students should still pursue scholarships from any donor,” Small said. “The more they have, the less they’ll have to borrow.”