Whatever it takes

When Artha Dutcher-Pugh graduates from Western Nevada Community College in May, she'll have about $14,000 in student-loan debt. Interest rates on student loans are increasing in July, but that won't stop her from taking out more during the next stage of her education.

Her career goal is too important, and within grasp.

The Carson City woman expects to take out another $10,000 to get her associate's degree in dental hygiene at Truckee Meadows Community College.

"The career I'm getting into is something I've been trying to get into for seven years," Dutcher-Pugh said. "And if that's what it costs to be a dental hygienist, it's worth every penny."

College graduates across the nation will see the interest rates on their government-guaranteed college loans increase in July.

The interest rates for Stafford loans are tied to the short-term treasury bill rate, plus 1.7 percent. The student-loan rate will change annually on July 1 depending on the increase in the treasury bill rate. The rate of the treasury bill on July 1, plus the additional percentage, will determine the student loan rate for the year, said Laura Whitelaw, WNCC financial aid counselor.

The current rate on most existing Stafford loans is 4.7 percent for students and 5.3 percent for those out of school. Whitelaw said this low interest rate is one reason why students and graduates should consolidate loans now. Consolidating loans means the student takes two or more of the same type of loan (subsidized or unsubsidized) and puts them under a new loan with one lender and one payment.

"The rate will vary for the rest of the life of the loan and interest rates are going up, so chances are it will be higher than the 4.7 percent," Whitelaw said. "So now is the time to do that, unless the interest rates drop in the future, but we have no way of knowing that."

Dutcher-Pugh said she has consolidated two of her loans and has plans to consolidate the rest to keep an interest rate below 4.7 percent.

Students taking out Federal Stafford loans after July 1 will receive a fixed 6.8 percent rate, which is 2.1 percent higher than the current rate. That rate will stay the same after the student drops below six credits, withdraws or graduates. Whitelaw said she doesn't think this increase will affect student enrollment.

"Students want to earn a degree, and they'll do whatever it takes to afford to go to school," she said.

Bryce Leinan, a Dayton High School graduate, has a small amount of student-loan debt. He may decide to work more hours at his campus job rather than take out an additional $3,000 loan with the higher interest rate.

"It's kind of like any other increase you have at school, it sucks but it's still necessary," the 22-year-old University of Nevada, Reno sophomore said.

If Leinan takes out the $3,000 loan, it will take him six years, paying $50 a month, to pay it off. With the fixed 6.8 percent rate, he will pay $676 in interest.

Under the current rate, he would pay about $180 less in interest over the life of the loan.

• Contact reporter Becky Bosshart at bbosshart@nevadaappeal.com or 881-1212.

Are you affected?

Graduates paying off student loans

If you consolidate your loans before July 1, you will lock in a lower fixed- interest-rate loan, said Renee McCloud, a loan coordinator with the University of Nevada, Reno.

For some graduates that will mean as low as 4.75 percent, but it varies by individual based on the weighted average of loans.

Start the process by calling the lender. Consolidating your loans means you are putting multiple loans into one new loan under one lender with one monthly payment.

Unless they are consolidated, all existing Stafford loans interest rates will change annually based on the treasury bill. The cap is 8.25 percent.

Students taking out college loan debt

Students can consolidate loans before July 1 because of a loophole in the law, McCloud said. If they have multiple loans, they should do it. After June 30, students will no longer be able to consolidate while still in school.

"First they have to ask to be put into repayment, then consolidate the loans and ask for an in-school deferment."

She said it's possible to get through the process before July 1. The only problem with this method is that the student will not have the six-month grace period after graduation.

McCloud recommends students stay with major lenders. There are plenty of offers going around, and the student may not want to trust an unfamiliar lender.

Calculate your debt at www.finaid.org.

Loans taken out after July 1 will have a fixed 6.8 percent interest rate.

Parents with Parent Loans for Undergraduate Students

The rate on existing Plus loans, now at 6.1 percent, is also tied to the treasury bill rate and will increase July 1. It will cap at 9 percent. Parents should consider consolidating any variable-rate loans before July 1.

The rate on Plus loans after July 1 will have a fixed rate of 8.5 percent for Federal Family Education Loan Program schools. Direct lending schools will be 7.9 percent.