Foothill College Braces For Impact of Loan Rates

By Katherine Hafner

Foothill College is one of many local, state and national colleges not immune to the fact that student loan rates have effectively doubled as of Monday.

Last week, Congress left for its July 4 recess without reaching a compromise to extend the current 3.4 percent student loan interest rate. As of Monday, the rates have been set to 6.8 percent, and will stay that way unless Congress retroactively lowers them when lawmakers return.

“It’s going to be a little bit painful,” said Kevin Harral, director of the financial aid office at Foothill. “Sadly a lot of students will be affected.”

Roughly 835 students at Foothill were using federally subsidized loans at the end of the last school year, Harral said. These students alone account for at least $2.7 million of the federally subsidized loans.

The average cost of attending Foothill for students, including room and board, is about $12,000, he said.

The change will immediately impact students taking summer classes.

Despite the major rate hike, Harral said the financial aid office has not yet heard from students with concerns.

He said he thinks this is because the change does not influence the money students receive through the loans, but instead comes into play later down the line, with repayment in many years.

“These changes are on the back end,” Harral said. “It might not be on people’s minds right now.”

Harral said he thinks whether or not Congress decides to extend the 3.4 percent rate for another year, a long-term solution needs to be reached.

“There needs to be an overhaul on how they determine these interest rates, so students can project,” he said. “The year by year thing is hard for everyone involved, and gives the impression that student borrowers are not the top priority.”

Harral said historically, a variable rate has been used, tied to the federal interest rate.

“When it was low for the country, it was low for borrowers,” he said. “While that wasn’t always great, it was easy to explain.”