MARIETTA — College students looking to get government loans to help pay for their education may want to think twice before signing on the dotted line after the large interest-rate hike took effect Monday, effectively doubling the rates on student loans nationwide.
Ron Day, director of Kennesaw State University’s Office of Student Financial Aid, said government-subsidized Stafford loans that required the student to pay an interest rate of 3.4 percent prior to Monday automatically increased to 6.8 percent for students securing new loans this week.
“Because of that increase, when a student starts paying back the loan, the interest will lock in at 6.8 percent, meaning they would pay about $4,000 to $5,000 more over the course of their college careers than under the previous rates,” Day said. “Some people think that small change doesn’t sound like a great deal. But if it’s a higher interest rate, it will be much higher as far as the amount you’ll have to pay back.”
Day, who also serves as the chair of the National Association of Student Financial Aid Administrators, urged parents and students to contact Georgia’s two U.S. senators to get a new bill passed when the Senate reconvenes. Until then, Day said college students should be wary about taking out any new government loans for the fall semester.
“We always tell students to be careful, but they should be even more so now because of these higher interest rates,” he said.
Day said most universities are willing to help students manage the additional costs, but students should do some of the legwork first.
“They should always look at the website of the school they are interested in first,” he said. “On our (KSU) website, there is clear information on the differences between these loans. Check the website first, but if they still need to call us, please do. All state schools have people that are ready and willing to give advice on student loans.”
Marietta student borrows ‘absolute minimum’
David Penticuff, a Marietta resident majoring in accounting at KSU, said he is confident that rates will go down after the Senate returns to session and passes a bill allowing for lower interest rates.
If no changes are approved, Penticuff said he doesn’t think his wallet will be impacted too much, but he does have long-term concerns about the higher rates.
“I’m already trying to borrow the absolute minimum I can,” he said. “I think the real tension is coming for folks maxing it out and trying to live off of it. I’m optimistic that for people like me it will slow the university’s increase in tuition.”
Penticuff said over the last couple of years, KSU hasn’t increased tuition by much, but has tacked on a lot of extra mandatory fees.
Local universities offer new options
To help students and parents handle rising costs, Kennesaw State University has teamed up with Nelnet Business Solutions to offer an online monthly payment program as a way to spread out tuition, meal plan, housing and other mandatory fee payments over the course of a semester rather than having to pay a one-time fee at the beginning of each semester.
This is the first time KSU has offered a payment plan to its nearly 25,000 students.
The new online program launched Monday covers up to $5,500 per semester for tuition and fees. “We strive to provide effective options and services for our students at Kennesaw State,” said Rita Adams, the university’s bursar. “The Nelnet Tuition Payment Plan is a resource we hope will make it easier for students to budget registration-related costs each semester.”
The payment plan costs $50 per student per semester. Details of each individual payment plan can vary based on how early a student enrolls in the program, with earlier enrollment potentially leading to a lower down payment and a possible extension of monthly payments from two to four months.
Students receiving financial aid can also participate in the payment program. Nelnet Business Solutions will calculate tuition and fees due after financial aid has been applied.
For details about Kennesaw State’s new online payment plan, visit mycollegepaymentplan.com/kennesaw.
Sylvia Carson, a spokesman with Southern Polytechnic State University in Marietta, said it too is offering assistance similar to KSU’s.
Southern Poly launches payment plan
“We just started working with Nelnet Business Solutions in the spring and offered it as a solution for students at the end of the semester for summer and fall,” Carson said.
Students must pay an enrollment fee of $50 per semester to take advantage of the payment plans but all of their educational expenses, up to $6,500 a semester, are covered, and no credit check is required.
“This is going to be a great partnership for our students and the university,” said Chris Bruno, director of Housing and Residence Life.
The Nelnet payment system will be available to students on the first day of registration for the fall 2013 semester. After putting down 25 to 60 percent of the cost of their educational expenses, students can opt to make two to five interest-free payments during the semester.
For more information about Nelnet, visit the Fiscal Affairs Nelnet Information Page at spsu.edu.
KSU and SPSU are two of only four in the University System of Georgia to offer a payment plan by a third-party provider.
Life University spokesman Craig Dekshenieks said the college does not have anything in place right now to specifically address the increase in loan rates, and it’s too early to mention anything that may be on the drawing board.
Rebecca Long at Chattahoochee Technical College said her college does not participate in the federal student loan programs at this time.
“While the majority of our students are on some form of financial aid — HOPE Scholarship for degree students, HOPE Grant for diploma students or Pell Grant — there are also numerous scholarships offered through the Chattahoochee Tech Foundation,” she said.