High interest rates and monthly payments can leave students paying for their education a decade or more after they have earned their degrees.

Many ISU students need some financial assistance while attending college. Some don’t realize the effect that this can have on them after graduation.

Earl Dowling, director of financial aid, said 77 percent of undergraduate students at Iowa State require some form of financial aid.

There are multiple choices for students wanting or needing to apply for loans.

“At this date, we have a wide range of student and parent loans available,” Dowling said. “We don’t have any difficulties in helping a family enable a student to attend Iowa State.”

Mark Oleson, executive director at the Financial Counseling Clinic and assistant professor of human development and family studies, said subsidized federal loans are the best option because the government will pay interest on the loans while the student is still in school. He advised filling out forms on time in order to reduce the amount of interest.

Dowling said the most students can borrow under the Stafford Loan is $2,625. He said although this may not sound like a large sum, total debt continues to grow, making it harder to pay off after graduation.

“The Regents’ report for students that received undergraduate degrees in fall `98 [through] summer `99 through federal loans, the average debt is in excess of $18,000,” Oleson said.

He said this figure does not include any other loans, such as bank and credit card loans.

Dowling said students have six months following graduation to begin paying back their loans, which are put on hold if students choose to go into graduate school, the Peace Corps, Army, National Guard or Navy.

Interest rates also make it difficult for students to pay back their loans, especially if students take a long time to pay the loans back. Changing interest rates make it difficult for students to know how long it will take to pay back their loans.

Dowling said different federal programs offer interest rates that are about the same. Dowling said the government reviews the interest rates every year in July and the interest rate was just lowered.

Dowling said the Federal Stafford Loans are kept at 8.25 percent and private loans are kept at 7.43 percent.

Oleson said monthly loan payments are based on what a student’s repayment selection is. When students graduate, they have three options to pay back their loans.

“It’s the student’s choice as to how the payments are going to be structured,” Dowling said. “They can make a flat rate or they can adjust it as their salary goes up.”

Oleson said the standard payment is a level repayment, which means a student is going to pay whatever is required to pay the loan off in ten years.

Another choice for students is the graduated repayment in which students pay a lower monthly payment when first out of college, with payments increasing every two years, Oleson said.

This will compensate for higher salaries.

A third option is the income-sensitive plan, in which a student’s income is considered and payments are then decided depending upon the level of income. Oleson said this option is close to a 25-year plan. After 25 years, the loan is forgiven, meaning the loan will no longer have to be paid back.

“For the standard repayment plan, a ten-year repay plan, the [national] average debt is $25,000, which would leave a monthly payment of $306 per month over ten years. [A debt of] $18,000 would be $220 per month for ten years,” Oleson said.

Oleson said students unable to pay back their loans sometimes go and get a loan from a bank instead of getting another job.

Oleson said getting a loan from a bank is not a preferable thing to do because banks will not offer as good of an interest rate or be willing to consolidate loans.

Dowling said students who need assistance with their financial aid can stop by the student financial aid office in Beardshear Hall.

“Students do not have to worry about what is best – we do that,” he said.