Students who have federal loans are going to suffer from the interest rate increases signed into law yesterday by President George W. Bush, and Northwestern’s Office of Financial Aid isn’t doing much to prepare students for the burden. Student loans are serious business and the recent changes are massive. Interest rates jumped to 6.8 percent for Stafford loans and to 8.5 percent for PLUS loans. Although the average NU student graduates with less than $20,000 in loans, many NU students graduate with more than $40,000, and a few with almost $100,000.
For a student graduating in June with $40,000 in PLUS loans, the change means that if they are able to pay back their loan in 10 years, they’ll pay an extra $6,000 because of the recent changes. And if they can’t afford the $495 monthly payment, they’ll have to extend the loan for longer than 10 years, further increasing the impact of the interest rate increase.
Luckily, the changes don’t have to impact all students. Borrowers have the option to consolidate their loans before July, but that means payments begin upon consolidation. Many students are confused and would appreciate advice from the financial aid office about what to do.
And yet the financial aid office has been strangely silent on the impact this will have on students. The school is required by federal law to have an “exit review” for graduating students during Spring Quarter, but they don’t do much to advise students beyond that.
NU should be commended for keeping NU price-competitive with its peer institutions. By not offering merit-based scholarships, NU is able to direct its aid to the students who need it most. They also have been able to largely insulate NU students from the overall cuts in federal aid over the past five years.
Students are worried about the changes and rightfully expect that NU will offer advice and counseling to make sure everyone understands how they will be impacted. For the students whose loan repayment just increased more than $6,000, they at least deserve the financial aid office’s recognition that this is significant and worth their advising time.
