President’s Two New College Affordability Proposals
On August 1, 2013 both houses passed HR-911 “Bipartisan Student Loan Certainty Act for 2013”. This will lower the student loan interest rate and change the way it is calculated in the future.
The student loan rate will be based on the US Treasury note plus a certain percent based on the type of student loan. Both the Senate and Congress have agreed to move back to a variable student loan rate.
The other change is the Stafford Student Loans will have the same interest rate going forward. Since 2008, the rate for a subsidized and an unsubsidized loan were different. Subsidized Stafford Loans will continue to have the interest paid by the government while the student maintains a certain credit level depending on the school.
Another advantage is the loan interest rate will stay in place for the life of the loan. Loans prior to 2006 had a calculation that was similar but the interest rate would change each year for all loans. This feature will help in your loan consolidation decision and repayment after graduation.
The risk of higher rates was addressed in the legislation. Since US Treasury notes are at record lower interest rate, there was some fear of making the rates fully variable. The new rules have interest rate caps which will prevent major increases in the future.
Listed below are the interest rates for Federal Direct Student Loans disbursed after 7/1/2013:
- Stafford Loans (Subsidized and Unsubsidized) 3.86
- Graduate Student Stafford Loans 5.41
- Parent PLUS Loan 6.41
- Graduate Student PLUS Loan 6.41
- Perkins Loan 5.00