Rates for those with Stafford loans rose in July

Uncle Sam wants more of your beer money.

As college-related costs rise, the federal… Uncle Sam wants more of your beer money.

As college-related costs rise, the federal government has ended the half-decade for cheap college loans since the start of the new millennium. While millions of college-bound Americans borrowed an unprecedented $40 million from the U.S. government last year, the interest rates on standard-issue federal loans will spike.

Government-guaranteed Stafford loans, a crowd favorite in colleges and universities across the country, will have a fixed interest rate of 6.8 percent, considerably higher than the current rate — which floats along with the 91-day Treasury bill.

“I didn’t even know what a T-bill was,” said Jack McLanahan, a recent graduate of Pitt mired in thousands of dollars of college debt. “It’s pretty scary. It was getting harder to get through college anyway.”

The rate on Stafford loans in repayment was 3.37 percent at the beginning of June. On July 1, it will increase by 207 percent.

Ece Ulus, bound for graduation in August, is one of the many Pitt students who availed themselves of Stafford loans. Along with her compatriots, she is planning to get consolidation loans to refinance the debt.

“[The rate increase] isn’t great,” Ulus said. “But I can deal with it if I consolidate.”

However, the news is grim for upcoming graduates. With less than 10 days before interest rates climb, there is limited time. Even after consolidation, there may not be much difference.

“Even with new loans, you’re still paying the new rate in the end,” said Darren Neal with Pitt’s Office of Undergraduate Admissions and Financial Aid.

The federal government pays the interest on loans for families under a certain income that qualify for them. But new loans will offer no cover from the new rates.

Parents are sharing students’ concerns with an interest rate rise in Parent Loan for Undergraduate Students, which is fixing at 8.5 percent. PLUS loans are supplements available to parents of students when Stafford loans are not enough.

Anna Rekounis’ daughter began considering Pitt after she graduated high school. As the pair toured the impressive interior of the Cathedral of Learning, anxiety over the expenses of calling Pitt home didn’t go away.

“As if it wasn’t tough enough sending your kid away to college,” Rekounis lamented. “We’re working hard to keep it from becoming worse.”