SALT LAKE CITY — As it stands now, undergraduates who apply for student loans beginning Monday will have to pay twice as much interest than at least half of Utah's undergraduate students are currently paying.

Interest rates are set to increase Monday to 6.8 percent for all student loan borrowers after the U.S. Senate failed to come to an agreement on the interest rates before heading into a holiday recess.

Currently, 52 percent of undergraduate student loan borrowers at Utah schools — a total of about 84,000 students — qualify for an interest rate of 3.4 percent on federally subsidized student loans, according to David Feitz, executive director of the Utah Higher Education Assistance Authority. But the federal lawmakers' inability to make a decision about whether to continue the discounted interest rates means all new loans issued after July 1 will come with a 6.8 percent interest rate.

Feitz said this change will not affect existing student loans or the students across the country who already pay a rate of 6.8 percent, including all graduate students and undergraduate students with unsubsidized loans or who didn't qualify for the lower rate under financial need standards as set by Congress.

He estimated that one-third of undergraduate students nationally qualified for the lower interest rate.

"The majority of students are already paying the 6.8 percent rate because the 3.4 percent rate applies only to undergraduate students who have financial need," Feitz said. "So it applies to a more narrow population, but it so happens that that population is made up of the most needy students."

He said the difference between the interest rate amounts on a $5,500 loan would only mean an increase of about $9 each month, but would be much more over the life of the loan. At 3.4 percent, interest would add up to $996 over 10 years, but at 6.8 percent, that number jumps to $2,096.

"The life of the loan interest cost is significantly more, but when money is tight and you have a lot of expenses to get established in your career, even $9 can make a lot of difference," Feitz said. "Keeping (interest rates) low are in the best interest of the students."

A report from the Joint Economic Committee showed that student debt rose from $550 billion in late 2007 to about $1 trillion in the first quarter this year. The same report said that without congressional action, the higher Stafford loan interest rates would add $4,500 to the cost of a four-year college degree.

In his 2014 budget proposal for the Department of Education, President Barack Obama proposed restructuring student loan interest rates, linking them to the 10-year Treasury rate with differing surcharges for subsidized and unsubsidized Stafford loans and PLUS graduate loans.

In May, the House passed legislation along party lines to do the same, though with slightly higher surcharges but an overall cap of 8.5 percent to protect student borrowers in the event of significant rate increases. Another key difference was that Obama’s plan would lock in the initial rate for the life of the loan, while the House plan would have rates reset each year.

The Senate this month considered a plan from Senate Republicans that also used a market-based solution, as well as a Democratic plan to extend current rates for one year.

Neither plan achieved the 60-vote threshold to defeat a filibuster. Thursday, Democrats said they would call the one-year extension plan to a vote once again July 10, after the rates have doubled.

Feitz said tying the student loan rate to a market rate is the most fair approach.

"The market mirrors the interest rate in the general economy instead of an artificial rate set by Congress," he said.

Feitz said it is unclear what course lawmakers will take and that there is talk that whatever decision they make will be applied retroactively to loans issued after July 1.

Meantime, John Curl, director of Financial Aid and Scholarships at the University of Utah, said his office is making students aware of the 6.8 percent interest rate.

"We've advised them or tried to notify them that interest rates have gone up this year," he said. "That's how we're moving forward — that it's going up this year. I would assume (a decision) would go retroactive and would change … until they make some sort of firm decision, we're just moving forward that that's what it's going to be."

He said students who have questions should contact their school's financial aid office. If they want to take further action, they should contact political leaders.

"Students are always the most powerful voice when it comes to these types of issues," Curl said. "If the students really don't care whether it goes to 6.8 or not … if they keep quiet, there will be no discussion. If students are really concerned, they need to contact their congressman and express their concern about it."

Feitz said the uncertainty that situations like these can cause for students, coupled with the burden of loans and debt, is a case for exploring other means to pay for education costs, including grants, scholarships and work study programs.

He recommended that students try to save before college and when they're not in school, that they map out their education early to avoid changing majors and that those with majors that typically lead to low-paying jobs consider a double major. Art majors, for example, could consider a second major in Web page design, he said.

"Obtain a skill while pursuing your dream," he said. "Make important life decisions about what's practical."

Contributing: Associated Press

Email: emorgan@deseretnews.com