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Continuing interest rates apply to subsidized loans

Published: Tuesday, January 29, 2013

Updated: Friday, May 17, 2013 13:05

sub loans

michele torres / The Prospector

Students face a new interest rate that has been applied to direct federal subsidized loans.


MIchele TOrres / The Prospector

With the beginning of the semester students form line at the Financial Aid office to find alternatives to paying their tuition.

   Students who take out federal subsidized loans have seen an interest rate increase from 3.4 percent to 6.8 percent that began July 1, 2012 and will continue until July 1, 2014. Students have also seen an accruing interest rate during the six-month grace period.

However, Reymundo Morales, Financial Aid assistant at UTEP, said the changes shouldn’t be a surprise for future and current students.

“With the economy the way it is right now, I think it makes more sense that the government has raised the interest rate on the loans,” Morales said. “If you think about it, (with) most bank loans the interest rate is still much higher that the student loans (of) the Department of Education.”

According to, William D. Ford Direct Stafford Subsidized Loans that have been accepted by students are now applying the accruing interest rate during the first six months after leaving school.

Changes to the loans were decided by the U.S. Congress in July of 2012, which affected loans that were accepted from July 1, 2012 and will continue on until July 1, 2014.

Some students said the changes are unfair for those who don’t have any other option than a loan.

“I think they are unfair because not everybody gets financial aid (scholarships and grants) and the only ways are to work and loans,” said Karla Jaramillo, junior English and American literature major. “The government is making it harder for us to continue our education.”

Jesus Ochoa, sophomore civil engineering major, said that even though the government changed policies on the subsidized loans, he will continue to take them to finish his education.

“It won’t change my decision because it’s school,” Ochoa said. “It’s unfair because you should have it easy for the six month grace period but it’s not, either way, you’re going to be in debt.”

Along with a change on interest rate, subsidized loans will no longer be available for graduate students.

According to news website, graduate students are no longer able to qualify for subsidized loans, however, they can still take out unsubsidized loans.

“As for graduate students in the eyes of the government it makes a lot of sense that they would cut out the subsidized loans, you would think that someone with a masters would be able to find the means to pay back loans,” Morales said.

“But as someone who is thinking of graduate school, it’s not too appealing.”

With the responsibility of taking out loans during a student’s academic career, there are also ways to help salvage the stress.

Edwin Hamilton, junior accounting major, took a subsidized loan out to pay for last semester’s tuition, but only decided on taking a portion of the loan while paying the rest out of his pocket using the EasyPay Plan.

“I took a good amount, like a thousand dollars first, while I paid the rest out of pocket,” Hamilton, said. “UTEP has a program where you can pay little by little with five different payments during the semester, it’s great.”

During the fiscal year of 2009, 9,173 students took out subsidized loans out of the 17,098 who took out federal, state and public loans. During that year 21,011 students were enrolled at UTEP.

The amount of students who took out loans this semester, as well as the 2011-2012 terms, are still being compiled, school officials stated.

If a student graduates and he/she does not have the means to pay off their school financially, there are certain programs that offer loan-forgiveness, which can help a student delay the payment process.

Those programs include volunteer work, military, teaching, legal and medical study programs, among others that can be seen and listed through

Nonetheless, it is recommended and encouraged for students to visit the Financial Aid Office in the Academic Services Building, Room 202 for any questions or concerns regarding subsidized loans and other affordable repayment options.

“I’ve never heard of a negative story as far as repaying,” Morales said. “Of course, it takes time but other than that, I’ve never encountered any problems.”

Marilyn Aleman may be reached at

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