Like a lot of college students preparing to graduate, Aaron Green, a senior at Cal State Long Beach, is looking forward to a career in his chosen field.

But the excitement over graduation is tempered with a common worry among college students: paying off their loans.

"That's certainly what I'm concerned about," Green, 22, said last week outside CSULB's University Student Union center.

"When I graduate, how long is it going to take to pay these loans off?"

A sociology major, Green, who earns $8 an hour on staff in the Educational Opportunity Program, expects to take out another subsidized Stafford Loan, which could bring his college debt to more than $2,000.

While not nearly as much debt as many college students are facing, it is not something he wants to deal with in a tough job market.

"That's my biggest concern - will I be able to pay it off?" Green asked.

Millions of college students across the nation are asking the same question. The answer may be harder to come by starting in July.

That's when federally subsidized student loan rates are set to double if Congress and the White House cannot agree on how to set the cost for student borrowers.

Rates for subsidized Stafford Loans, for which the government pays the interest while and immediately after a student is in college, are set to double from 3.4 percent to 6.


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8 percent if Congress does nothing between now and the end of the month. Unsubsidized Stafford Loans already carry 6.8 percent interest rates.

The rate increase was actually set to go into effect one year ago, but Congress put off the decision until now, following its current pattern of delaying key votes over party-line disagreements.

While congressional Republicans have supported bills that would tie students' borrowing costs to market fluctuations in interest rates, Democrats in the House have backed short-term proposals that would keep rates at the present low levels established by the government.

Proposals from both sides of the aisle have failed to make it through the Senate, while several other bills are in committee as lawmakers have less than two weeks to reach an accord before rates automatically double.

And similar to the way congressional brinkmanship during last year's "fiscal cliff" debates over taxes and budget cuts prevented Americans' from knowing what their tax rates would be until after lawmakers missed their self-imposed Dec. 31 deadline to reach a deal, prospective college students and their families struggle to figure out the likely cost of higher education as long as a deal remains elusive.

"It's difficult to know what terms you will be subject to," said Heather Jarvis, an attorney who writes student loan advice at AskHeatherJarvis.com.

"We've gone more and more to a debt-based system of higher education."

Student loan debt has climbed as tuitions trended upward in the years during and after the Great Recession.

Average outstanding student loan debt for all age groups stood at nearly $16,000 during the first quarter of 2005, and had climbed to roughly $24,000 by the end of last year, according to the New York Federal Reserve Bank.

Over the same time period, total outstanding debt grew from $363 billion to $966 billion while delinquency rates worsened.

For example, among borrowers under the age of 30, the percentage of those who were behind on their payments by 90 days or more rose from 3.7 percent to 8.

Students on campus at Cal State University, Long Beach on Feb. 8, 2012.
Students on campus at Cal State University, Long Beach on Feb. 8, 2012. (Jeff Gritchen/Staff Photographer)
9 percent.

Allie Bebinger is graduating today from Cal Poly Pomona with a degree in communications.

"I've got probably about $30,000," in loans, Bebinger said. She's already interviewed for public relations jobs and will be interviewing for more next week.

"Right now, it's not so much the loans I'm worrying about - it's moving into a place and being capable of keeping up with the rent, but yeah, I'm trying to get a job as soon as possible," she said.

She ran up much of her loans in her junior year, when she studied abroad in New Zealand. Since then, she worked on campus in an attempt to save money.

She doesn't regret her year in New Zealand, but graduating $30,000 in debt definitely will affect her life following graduation. 

"I'm really big on traveling; I've got family all over and friends all over the world," she said. "I'd really like to say I can go visit them, but with those loans, I've got to save a lot of my money for that."

Within the Cal State University system, undergraduate tuition for a student taking six units or less more than doubled from $1,464 in 2006-07 to $3,174 for the coming school year.

The average debt load for a California State University student is below the national average, coming to around to $16,650, said Dean Kulju, the systemwide director of financial aid services and programs for the Cal State University system.

About 47 percent of CSU students carry a debt, Kulju said. Fifty-three percent graduate with no loans at all.

"Obviously, anything that would that would keep the rates as low as possible would be our preference and good for the students," said Kulju, who added that an undesirable rate increase would not necessarily be catastrophic for students.

"The average indebtedness is much lower than the national average, so even though this rate could be doubling, it wouldn't have a dramatic effect on the CSU students," he said.

A Democratic proposal to maintain current loan rates recently failed to advance in the Senate. A Republican proposal that would have indexed student loan rates to those of 10-year Treasury bills, plus 3 percent, also died.

A similar measure to tie Stafford and PLUS loans, offered to graduate students and students' parents at market rates, passed the Republican-controlled House in late May. The White House, however, has promised to veto the bill.

The bill, from Minnesota Republican John Kline, would set Stafford loan rates at the rate of a 10-year Treasury bill plus 2.5 percent, with a maximum rate of 8.5 percent. PLUS loans would be indexed to 10-year Treasury bills, plus 4.5 percent with a cap of 10.5 percent.

If the Kline bill were the law today, Stafford rates would be set at nearly 4.7 percent. The Congressional Budget Office estimates the House bill would reduce federal spending by $1 billion over the next five years.

The bill would not apply to Perkins Loans, available to students with high financial need. Perkins rates are set at 5 percent.

The University of California's associate director of federal government relations, Chris Harrington, said it may be better for Congress to pass another short-term solution to avoid a sudden rate hike and then go to work at a more.

"We're at a stalemate right now. I think the best solution is to extend the 3.4 percent interest rate now and work out a solution," he said.

Last week, Inland Empire Rep. Gloria Negrete-McLeod, D-Chino, and Janice Hahn, D-San Pedro, introduced a bill to extend the grace period for subsidized Stafford Loans from six months to a year.

The Get Relief from Academic Debt Act of 2013 is intended to give new graduates more time to find a job before they begin paying back their loan.

"We need to be realistic about our expectations to have students repay their loans given today's economic situation," Negrete-McLeod said in a statement.

"By waiting until they are fully integrated into the workforce, we help prevent them from defaulting on student loans and create paths towards home ownership, retirement savings, charitable contributions and a myriad of other economic issues key to preserving the vitality of our state and our nation."

Although student loans are critical for millions of students - the College Board reports the number of students taking out Stafford Loans grew from roughly 5.4 million in 2001-02 to 10.4 million in 2011-12 - some figure out ways to finance a higher education without debt.

Sergio Mendoza is transferring into Cal State Long Beach this fall. The 40-year-old biology student, who is coming from Long Beach City College, decided to go back to school after being laid off from a warehouse management job at the beginning of the Great Recession.

He received advice from those familiar with college loans.

"They said if I can, try to make it on my own," Mendoza said.

Mendoza is making his way through college without debt, using his savings, grants and money he didn't spend on a wedding that didn't happen.

He recommends college students hunt for scholarships and grants. And internships. Networking is important.

"Absolutely," Mendoza said.

"Look for anything that can open a door (financial aid)."


Staff writer Beau Yarbrough contributed to this report.