All threads discussing student loans that I could find have not been posted on in over a year, so I started this new thread.
For all the Undergraduate students out there, it just got a little more expensive for you to borrow money from the federal govt. to go to school. For parents of students and graduate students it just got a whole lot cheaper for the next couple of years, but that is expected to change soon.
The new law governing interest rates on federal student loans was signed into effect by President Obama today. This is for all the Stafford loans, (ie: subsidized, unsubsidized and direct pluus for parents.) Until this year undergrad students were able to borrow money through a subsidized loan at 3.4% interest on the loan, payments were deferred until 6 mo after you graduate and interest did not start to accrue until after the 6 mo grace period. Graduate students have not been allowed to borrow money through a subsidized loan for a few years now and instead had to use the unsubsidized loan. The terms for the unsubsidized loan were 6.8% and while the payments were also deferred until 6 mo after graduation, interest starts accruing immediately. Direct Plus loans were for parents of students who wanted to take out a loan to help pay for school, this rate was fixed at 7.9% with the same terms as an unsubsidized loan.
The new law now ties the interest rate for all three loans to the 10 yr treasury note. As the value goes up, the rate of interest goes up and vice versa. The new current rates are sub 3.9%, unsub 5.4% and DP 6.4%.
So for all you graduate students and parents with a loan from previous years still outstanding, if you can still apply for a loan this year (still in school) take out the max amount that you were awarded, not just the min you need for tuition and books and use whatever is left over from this years tuition to pay off what is outstanding from previous years. You will be saving at least 1.4% interest on whatever you can "reborrow" on.
Poll