Federal education loans and grants will become more affordable for students!
The interest rate for Stafford loans decreased by 0.8 percent from 6.8 percent Tuesday and will decrease during the next four years until it hits 3.4 percent. The decrease is a provision of the College Cost Reduction and Access Act, signed into law by President George Bush in September 2007.
Lawmakers made the controversial decision to fund the $20 billion bill by slashing federal subsidies to private lenders that provide the funding for all student loans and grants.
Students with loans that were acquired before June 6th 2005 will see a decrease in their interest that will subsequently decrease over the next 4 years.
Current undergraduates that plan on attending school for the 2008-2009 year can expect to get a lower interest rate than expected on their Stafford loans. This interest amount will decrease over the next four years. The Stafford loan is the most popular need-based loan that students can receive. Each year, about 5.5 million students borrow through Stafford loans, which are awarded to families with an average income of $67,000 or less, according to the Congressional Research Service.
The Pell Grant will increase by $490 under the law, raising the highest available award to $4,731 for the 2008-2009 school year. About 5.5 million low-income students receive the grant each year. Students who are interested in the teaching profession are also eligible to receive a separate $4,000 grant each year, for a maximum award of $16,000.
"From a student perspective, this is a good thing," said Dan Weaver, assistant commissioner for business and support services for the Texas Higher Education Coordinating Board.
The new interest rate, now 6 percent, will save the average student borrower beginning college in 2008 about $2,570 over the life of his or her loan, according to a release from the office of the bill’s author, U.S. Rep. George Miller, D-California. The loan limit will also increase to $31,000 for dependent students and $57,000 for independent students.
"This first interest rate cut is just the beginning of our efforts to remove the many financial barriers that prevent far too many qualified students from being able to pursue a college degree," said Miller.
Respectfully,
Tony Tovar
P.S. Thanks to the Daily Texan (Credit)
July 3rd, 2008 at 5:28 am
It would behoove you to note that the change in interest rates do not affect all Stafford loans.
The drop in interest rates from 6.62% to 4.21% only affects loans obtained prior to July 1, 2006.
If all of your federal loans were issued after July 1, 2006, consolidating them will not lower your interest rate, because their rate is fixed at 6.8%.
The fixed rate for all federal loans issued for the 2008-2009 school year will drop for UNDERGRADUATES to 6.0%, with the fixed rate being lowered by a certain amount for loans taken out in subsequent years.
Federal loans taken out by graduate students for the 2008-2009 school year are still subject to a fixed interest rate of 6.8%.
The lower interest rates really only affect those students who took out loans prior to July 2006, and those undergraduate students who take out loans this year and later.
Basically — if most of your loans are going to be centered on the 2006-2009 school years, you’re not going to see a substantial change in your interest rates. And, if you’re a graduate student, you don’t have a prayer.
Interest rates for federal student loans is a very important topic to many students. Please report it with more information and accuracy.
July 3rd, 2008 at 5:01 pm
Federal Stafford Loan Interest Reduced! Are you included?…
Federal education loans and grants will become more affordable for students!
The interest rate for Stafford loans decreased by 0.8 percent from 6.8 percent Tuesday and will decrease during the next four years until it hits 3.4 percent. The decrease is…
July 3rd, 2008 at 11:26 pm
Music to my ears. Sounds like my bank account will be breathing a little better because of this.
July 4th, 2008 at 2:50 am
Indeed JM, I think this is a great great thing for many people out there!