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Seth Emery says that without his student loans he couldn’t be a student at Kansas University.
And he’s not alone. About 8,000 KU undergraduates took out subsidized federal student loans for this past school year.
Those loans, available only for students who demonstrate financial need, don’t accumulate interest until students are done with school. They also carry a lower interest rate — or they will, at least, until next week. Unless Congress takes action before Monday, rates on any new subsidized loans are set to double from 3.4 percent to 6.8 percent, the same rate as unsubsidized loans.
And at least a few KU students are watching. Emery, a sophomore from Paola, is one of them.
“It’s important to give a wide range of people a chance to get into higher ed,” Emery said. He’s taken out loans of the subsidized and unsubsidized varieties, he said, and he’ll continue to rely on them to pay for the next three years of his education. Those new loans would be subject to the higher interest rate if Congress doesn't act.
Also watching is KU Student Body President Marcus Tetwiler, who admits he got “kind of hot on Twitter” on Monday about the issue. (He's at @KUPresident.)
In addition to tweeting to KU students to contact their elected representatives, Tetwiler has also joined a new group of more than 100 student body presidents from around the country that sent a petition to lawmakers last week urging them to prevent the rate from doubling.
Tetwiler said he worried that representatives might consider financial aid somewhere the government could cut corners because college students aren’t quite aware of the stakes.
“It seems like we’re an easy target,” Tetwiler said.
A congressional committee estimated last week that if the rate were to double, the cost for the average student borrower would be about $2,600 over the course of 10 years.
A similar deadline standoff occurred last summer, before the 3.4 percent interest rate for subsidized loans was renewed. This year, a bipartisan deal in Congress would avert the doubling of the rate by tying interest rates to financial markets.
That's the case, at least, for undergraduates. For graduate students, subsidized loans are no longer available. That means Pantaleon Florez, who began a master’s degree program in the KU School of Education last year, will have to pay double the interest rate he expected when he decided to go back to school, in addition to extra interest that accumulates while he’s a student.
“None of this has been brought up,” Florez said. “It’s basically been swept under the rug.”
Florez, also part of KU’s Student Senate, said he had no doubt he could pay back his loans, but he guessed that the additional interest would hurt his quality of life after graduation.
Many students are likely still not paying attention to what might happen with loan interest rates, said Gail Sherron, an associate director for financial aid and scholarships at KU. Her office tries to counsel students about being responsible with their loans, she said, urging them to think ahead.
“They’re not necessarily looking at the nitty-gritty behind the scenes,” Sherron said.
Officials don’t yet know how many KU students will take out subsidized loans for the coming year. KU students who take out loans tend to accumulate about $2,000 less in debt over their college careers than the national average, Sherron said.