Interest rates may sink for student loans

As Democrats seize control of the House and Senate, the next Speaker of the House, Nancy Pelosi (D-California), has announced the majority's agenda for the nation, including lowering the interest rates on student loans.

This is of particular interest to college students since over half of all undergraduates nationwide use federal student loans to pay for their education, according to the U.S. Department of Education's 1999-2000 National Postsecondary Student Aid Survey.

If the interest rate were lowered, it would make students' monthly payments on their loans smaller, as well as reduce the amount of interest that builds up over time, said David Chambers, associate director of the Student Aid Office at MTSU.

Congress has set the current interest rates at 6.8 percent, though in previous semesters they have been variable. When rates are variable, they are adjusted yearly according to the overall interest rates based on the economy and inflation, Chambers said.

Over the past two years, the interest rates on federal student loans have risen by 2 percent. The rate has been capped at 8.5 percent, but the intention is to keep it less than that, Chambers said.

"There's no way to know what [Congress] is going to do," he said, adding that interest groups and banks have a great deal of influence on the rates.

According to Chambers, Congress can revise the interest rates every six years when they look at the Higher Education Amendment.

Many MTSU students have taken out student loans, though not all are overly concerned with paying them back.

John Glasscock, a sophomore in architecture, took out a need-based loan to pay his full tuition for four or five years.

"It was that or not go to school," Glasscock said.

Though his payments are being deferred, Glasscock said he is not worried about interest rates because he will try to pay the loan off as soon as possible. Though lowering the interest rates would be beneficial, Glasscock said he is not optimistic about the potential changes.