Pastides advocates against the increase, Rep. Trey Gowdy supports the spike
During the 2010-11 academic year, about 12,500 USC students borrowed a combined $66 million in subsidized loans, according to Edgar Miller, USC's director of student financial aid and scholarship. And unless Congress steps in, interest rates on these loans for undergraduate students will double for enrollment periods starting after July 1.
The interest rates will increase from the current 3.4 percent to 6.8 percent, the level they were in 2007 when an adjustment to the law was made to steadily reduce the rates over the course of four years, according to Miller.
Interest accrued on Stafford loans is paid for by the federal government while students are in school; however, students must pay any interest the loans collect after graduation. College students enrolled on at least a half-time basis qualify for these loans based on the financial need demonstrated on their Free Application for Federal Student Aid, according to Miller. However, the doubled interest rates will only affect undergraduate students with subsidized loans because, according to staffordloan.com, the interest rates for graduate students with the loans is already at 6.8 percent.
The default rate for USC graduates who cannot pay back their student loans is 2 percent, compared to the national average of 8 percent, said Miller.
USC President Harris Pastides said the university is vocally advocating against increasing the interest rates.
"I personally went to Washington, D.C., a couple of weeks ago and went to every single elected official's office," Pastides said, adding that he advocated a list of concerns on the university's behalf, and that the interest rates were near the top of the list.
Rep. Trey Gowdy, R-S.C., supports the increased interest rates. As access to low-interest loans has increased, the cost of tuition has increased, Gowdy said in an email response provided by his communications director Josh Dix.
"Accordingly, students are borrowing more principal and paying a lower interest rate," Gowdy said. "Clearly it would be better for students to pay a higher interest rate yet on a smaller principal."
Gowdy also said endowments are growing and salaries for nonacademic positions are increasing while tuition is growing exponentially.
"The key is to make education affordable from a tuition standpoint, not merely an interest rate standpoint," Gowdy said.
Pastides said going to college is still expensive, even at the current interest rate, and that USC will account for the rate when deciding next year's tuition.
He echoed his State of the University address in emphasizing the need to keep tuition bumps as low as possible, and predicted that any increases at USC for next year will be more moderate than at peer universities like Florida, Georgia and North Carolina.
"I think the days of large tuition increases are over," Pastides said. "They are for this university."
Editor's Note: Colin Campbell and Rachel Dean contributed to this article.