Many Penn State students with educational loans don't pay attention to the interest those loans can accrue — but if they did notice, they might be in for a pleasant surprise as the result of an early January Federal Reserve cut in the federal funds rate.

The federal funds rate, the interest rate Sbanks charge each other, was cut by .5 percent at the beginning of the year. It was the first rate decrease in two years.

When interest rates for banks decrease, often interest rates on the banks' loans decrease, said Rich Barrickman, senior vice president of Nittany Bank, a community-based bank that deals mostly with the parents of local students who occasionally seek loans for tuition.

The Office of Student Aid at Penn State brings together various banking institutions with the United States Department of Education and Pennsylvania Higher Education Assistance Agency (PHEAA) to certify students for loan eligibility.

Once the money is received, the Office of Student Aid then disperses funds to students. But apart from routine questions, only a fraction of students pay attention to the details of the loans they receive while they are in school, said Melissa Kunes, associate director of federal and state programs with the Office of Student Aid.

"I fill out the paperwork, but I don't know a lot of the details," said Virginia Sherno (junior-public relations), referring to her Stafford loan. She said while educational loans might be somewhat affected by the interest rate cuts she doesn't see a big change in the near future.

If anything significant occurs, it will not happen until July 1, the time every year when interest rates are recalculated, Kunes said, adding that trends in the rates will mimic changes in the economy.

Chad Smith, PHEAA spokesman, said federal interest rates don't have a direct effect on student loans but can be indirectly affected through adjustments made by Congress, who control the treasury bill that helps to fund federal student loans.

Preoccupied with the everyday dealings of being a student, Sherno has not kept track of the interest rates of her loans.

"I'll be thousands (of dollars) in debt, but I don't see a problem because it's spread out over the years . . . I'm not really looking into the future of it," she said.