Nearly 6,000 students at Montana State University will have to repay more money on their federal subsidized student loans, unless Congress acts to lower the interest rate that just doubled.

“We are hoping those (rates) will stay down, because access and affordability … are really important to us,” Lindsay Murdock, MSU student president, said Monday.

Brandi Payne, MSU’s financial aid director, said in the 2012-2013 school year, some 5,700 undergraduates received subsidized direct federal loans, which go to students with financial need.

Congress debated ways to head off the doubling of subsidized loan rates before the July 1 deadine, but nothing passed. So rates on new loans have jumped from 3.4 percent to 6.8 percent for more than 7 million students.

Now back in Washington from the Fourth of July holiday, members of Congress are debating whether to roll back the rates, retroactive to July 1. That would cost more than $4 billion for one year.

Though new rates are in effect, most students don’t take out their loans until August.

According to the New York Times, the doubling of interest rates could cost students an extra $1,000 over the life of a loan for every year they take out loans, or roughly $4,000 for students who took out loans for four years.

Subsidized loans are so called because the government pays the interest while students attend college. Students don’t start paying interest until six months after leaving school.

Another 6,200 unsubsidized federal loans were also awarded to MSU undergraduates and graduate students in the past year, and those already charge 6.8 percent interest, Payne said. Many students receive both subsidized and unsubsidized loans.

The cumulative debt for MSU students who borrow is $27,319 from all types of loans, according to MSU’s Common Data Set. Most of that — $25,750 – is in federal loans.

MSU students received a total of $68.8 million in federal loan money last year, including federal direct subsidized and unsubsidized loans, Perkins loans and nursing loans.

Payne offered advice to MSU students worried about college loans:

  • Borrow wisely — only as much as needed for educational costs.
  • Take at least 15 credits per semester, if possible. This will reduce the time it takes to graduate and reduce overall loan debt. MSU has a ‘flat spot’ – which means anything over 12 credits costs no additional tuition.
  • Find answers to student loan debt by meeting with an adviser in MSU’s new office of financial education, in the Strand Union Building basement floor, next to the Financial Aid Office.

Gail Schontzler can be reached at or 582-2633.


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