ASU students who accept student loans this year will not see an increase in their interest rates, no matter what the economic climate looks like after President Barack Obama signed a bipartisan student loan bill into law on Aug. 9.
Rep. Kyrsten Sinema, D-Phoenix, said she voted in favor of the measure, because it will greatly help students and will give them certainty.
“The first good thing it does, is that it provides a fixed loan rate for any student who gets a loan,” she said. “This means that no matter what happens in the market in the future, whether it’s five or 10 years down the road, the student loan rate for that individual loan will not change.”
However, the law connects the interest rate to whatever the market rate is at the moment and adds an extra percentage.
Sinema said she plans to introduce a new bill that would get rid of that portion of the law and instead add only the cost of administering the law.
Sinema, who is also a professor at ASU, said students who accept loans will benefit from the law.
“Now is an awesome time to get a student loan, because it’s really cheap,” she said. “In the long term, it could be expensive for students, so my new law could help the little sister or little brother of the current students.”
Melissa Pizzo, ASU financial aid interim executive director, said the law will help many students but they should still be aware of the terms of the loans they accept.
“It’s possible that over time, depending on what the treasury index looks like, the interest rate for that student loan might increase,” she said. “It’s something that we need to continue to monitor. We need to make sure that our students know what the interests rates are so they are able to make good decisions.”
When ASU students finish their Free Application for Federal Student Aid, they receive a general financial aid package that sometimes includes loans as options. Then, students determine if they want to use those loans. If they do, they first have to take online counseling that helps them better understand the loan’s conditions.
“That component educates students on what the loans are, what their responsibility is, what their commitment is (and it) talks about interest rates,” Pizzo said. “It prepares students to understand what they´re committing to when they accept the loans.”
Although the University does not have data yet as to how many students will accept student loans this school year, Pizzo said ASU students are still below the national average.
Students also have an online cost calculator at their disposal, which can help them manage and understand what their budget might be for the academic year, Pizzo said.
Mathematics education graduate student Michael Tallman said students should always be aware of the interest rates and other conditions of their loans.
Tallman said, although he has never had to accept a loan, he thinks the law is a step in the right direction.
“Any policy that ensures that students who are educating themselves in American universities pay as little interest as possible is a good policy,” he said. “Anything that discourages students from higher education is a bad policy.”
Reach the reporter at dpbaltaz@asu.edu or follow her on Twitter @dpalomabp
