Student loan rates to rise

For some students, the cost of college is increasing again.

But this time it isn’t the… For some students, the cost of college is increasing again.

But this time it isn’t the chancellor, the board of directors or even the University that’s responsible. Blame the federal government.

As of July 1, the interest rates for repayment of federal student loans are rising to 5.3 percent for Stafford loans and 6.1 percent for Parent Loan for Undergraduate Student loans, the largest increase in the two programs’ history.

Suzanne McColloch, the senior associate of Pitt’s financial aid office, however, doesn’t think the increase will dramatically affect most students’ finances.

“Honestly, it’s not going to cramp people’s lifestyles,” McColloch said.

She explained that the increase would amount to about $10 a month more when students begin to pay back their loans.

The Stafford and PLUS loans are currently at record-low interest rates. Parents of students can receive PLUS loans.

McColloch also said that a 6 percent interest rate is still relatively low, especially in comparison to interest rates for credit cards and mortgages.

“It’s not a panic kind of thing,” McColloch said.

She said that there would only be cause for concern if the interest rates continue to increase at the same rate annually.

Finaid.com, a Web site that specializes in college financial aid issues, advised students to consolidate their loans to retain the current interest rate.

If students consolidate loans and then ask the University to defer payments until graduation, the current, lower interest rates will be locked in. However, students must have accumulated more than $7,500 in debt before they are able to apply for consolidation.

McColloch said this advice may be more appropriate for graduate students or students attending more expensive universities, because they have accumulated more debt and may have more loans.

She added, however, that each student must determine if consolidation best fits his or her financial needs.

McColloch recommended that students contact the Pennsylvania Higher Education Assistance Agency for questions about loan consolidation or interest rate increases. The PHEAA’s Web site is www.pheaa.org.