Millions of undergraduate students across the country who rely on federal subsidized Stafford student loans to fund their education, including about 15,000 at MSU, could see their interest rates double this summer, unless Congress takes legislative action.

President Barack Obama has taken up the issue of student loan interest rates, calling on Congress to extend the College Cost Reduction and Access Act of 2007, which approved a reduced interest rate of 3.4 percent for four academic years. The legislation is set to expire on July 1, after which a higher rate of 6.8 percent will take effect.

Obama, who spoke on the issue during a conference call Tuesday afternoon, said students leave college with an average of $25,000 in debt, nearly 7.5 million students would owe more on loan payments.

“I know what this is like,” he said.

“When Michelle and I graduated from college and law school, we had enormous debts, and it took us a lot of years to pay off.”

At MSU, students borrowed about $72 million in the 2010-11 academic year in subsidized Stafford loans, with an average loan of about $4,737, according to information from the Office of Financial Aid.

But State Rep. Bob Genetski, R-Saugatuck, said if more money is given to federal student aid, there might be fewer wages available for new college graduates if more money is put toward loans than creating jobs.

He also said colleges and universities need to be looking at their own expenses and how they affect students, citing MSU’s health care mandate as an added expense to tuition.

“Sometimes politicians show you what’s in the one hand and not the other,” he said.

Nick Kowalski, chairman of the MSU Campus Conservatives, said charging taxpayers to artificially lower student debt in the short term would be a bad idea.

“If one were to file for bankruptcy, the student loan debt would not go away,” he said.
“It’s a bad idea to charge taxpayers in the short term to artificially lower student debt.”

Extending the lower interest rates requires legislative action to approve, and U.S. Rep. Gary Peters, D-Bloomfield Township, is among a group of legislators pushing a bill to prevent the rates from doubling in July.

“We’ve got a lot of work to do, but by working together, we’ll help millions of Americans achieve the dream of a college education,” he said in a statement.