MANKATO — Nyamuoch Giek squeaked in just under the wire.
The Minnesota State University senior already did the walk-through for graduation, and she's finishing up with several classes before making it official. That's why Giek was a little relieved this week when she heard about Congress failing to act to prevent student-loan interest rates from doubling from 3.4 percent to 6.8 percent.
That's quite a jump, she said — enough to concern her a little bit about her four younger siblings who will likely be matriculating to state colleges and universities. Had it happened while she was taking loans, Giek said she might have given pause before accepting student loans.
“That's definitely something that would have affected my decisions,” she said.
For Derek Schultz, the news is affecting his decisions. Schultz has started thinking seriously about going back to school as a non-trad, maybe at South Central College, he said.
But already working odd jobs to make a living, the idea of piling on additional costs to attend school has him thinking about whether now is the best time after all.
“The cost is already so high,” he said. “I have friends carrying $50,000 in student-loan debt who can barely pay the monthly payment. Lawmakers have to realize what they're doing to students.”
The new interest rates will go into effect for students taking out Subsidized Stafford loans for fall unless Congress fulfills its pledge to restore lower rates after returning from the July 4 holiday. The loans account for about 25 percent of all direct federal borrowing.
Congress' Joint Economic Committee estimated the cost passed to students would be about $2,600. Even when lawmakers return, there's no guarantee there will be the votes to restore the lower rates.
Students only borrow money for one year at a time. Loans taken before Monday are not affected by the rate hike.
Both political parties tried to blame the other for the hike and student groups complained the increase in interest rates would add to student loan debt that already surpasses credit card debt in this country.
Lawmakers knew for a full year the July 1 deadline was coming but were unable to strike a deal to dodge that increase. During last year's presidential race, both parties pledged to extend the 3.4 percent interest rates for another year to avoid angering young voters.
Financial-aid offices at area colleges and universities began warning students months ago about the possibility of rate hikes as financial-aid forms were being filled out for fall.
Jayne Dinse, financial aid director at South Central College, said in the spring they were doing their best to inform students about what the change could mean for paying off student loans.
Dinse said SCC has seen an increase the past few years in student-loan borrowing as tuition costs have increased and financial-aid funding hasn't kept pace. The average amount borrowed now by SCC students is $12,650.
That sentiment was echoed in a Free Press story last fall about the rising student-debt load at Minnesota State University. Sandra Loerts, MSU director of financial aid, said there aren't hidden programs students can be made aware of in lieu of loans.
“What we do here is we encourage students to only borrow what they need, not necessarily what they're eligible for,” she said in November.
A study released last fall by the Institute for College Access and Success in California that looked at 2011 graduates nationwide showed that MSU students had an average debt of $29,415, which is greater than St. Cloud State University ($28,819), the University of Minnesota-Twin Cities ($28,407), and Southwest Minnesota State University ($26,394).
The Associated Press contributed to this report.