Share “Interest rates on some federal student...”

Interest rates on some federal student loans double, causing concern among Oklahoma students

Instead of spending her final semester as an undergraduate on campus in Edmond, University of Central Oklahoma student Amy Watkins will be on a ship in the middle of the Atlantic Ocean. But when it comes time to pay for the program, Watkins could see a bigger bill than she originally expected.
by Silas Allen Published: July 2, 2013

/articleid/3858160/1/pictures/2148678">Photo - Amy Watkins is a UCO student who is going to be taking out student loans to complete her bachelor's degree, Monday, July 1, 2013. Interest rates on federal student loans are doubling today. Photo by David McDaniel, The Oklahoman
Amy Watkins is a UCO student who is going to be taking out student loans to complete her bachelor's degree, Monday, July 1, 2013. Interest rates on federal student loans are doubling today. Photo by David McDaniel, The Oklahoman

In Oklahoma, 53 percent of 2011 college graduates left school with student debt, according to the Joint Economic Committee report.

On average, those students carried $21,331 in debt at graduation.

Increasing the interest rate on subsidized Stafford loans is particularly dangerous because it targets students who need the most assistance, said Frank Palmasani, a college admissions adviser. Palmasani, a former director of admissions at Lewis University in suburban Chicago, is the developer of Financial Fit, a college affordability program.

Federal Stafford loans are available in two forms — subsidized and unsubsidized. While unsubsidized loans are available to undergraduate, graduate or professional students, regardless of need, students must demonstrate financial need to qualify for subsidized loans.

Monday's interest rate increase applies only to subsidized Stafford loans. Unsubsidized Stafford loans and other federal programs like Perkins loans won't be affected.

Because the increase applies only to subsidized Stafford loans, the heaviest impact will fall on the neediest families, Palmasani said.

“You're targeting, really, families who have the least capacity to repay,” he said.

Whether or not Congress reinstates the lower interest rate, Palmasani said, it's important that prospective college students have reasonable expectations for how much their families can afford to pay for college.

Instead of just looking at the published price tag, he said students should consider the net price — the cost students should expect to pay after scholarships, grants and a reasonable amount of borrowing.

In the past, Palmasani said, students often selected a college based on their own wishes, without taking the net price into account. But as the cost of higher education climbs, that method of choosing a school isn't viable anymore, he said.

“This is just not functional anymore,” Palmasani said. “We just can't do it that way.”

by Silas Allen
General Assignment/Breaking News Reporter
Silas Allen is a news reporter for The Oklahoman. He is a Missouri native and a 2008 graduate of the University of Missouri.
+ show more


AROUND THE WEB

  1. 1
    OKC Thunder's Russell Westbrook marries Nina Earl in star-studded Beverly Hills ceremony
  2. 2
    Obama Renames Mt. McKinley 'Denali' Ahead of Alaska Trip
  3. 3
    2015 US Open -- Maria Sharapova announces she will not play
  4. 4
    Neurologist and Writer Oliver Sacks Dies at 82
  5. 5
    What "Games Of Thrones" Characters Look Like In The Books
+ show more

FEATURED JOBS



× Trending news Article