We could all use some good news when it comes to money these days. And even if it’s not your own money, the federal government is taking steps to make borrowing money for student loans cheaper and easier to get and much simpler to pay off.
On July 1, the federal government lowered the interest rates on many student and parent loans, and took out the middle-man by awarding loans directly through the government itself rather than through a bank.
The only downside is that there will be a bit of a learning and processing curve on the shoulder’s of the schools’ financial aid offices as they learn about the new rules and spend more time answering parents’ questions. So expect longer phone times and maybe mixed messages from school administrators during the first few months of the academic school year.
But once everybody knows what to do and how to do it, these recent changes should make lives a little easier and parents’ and students’ wallets a bit fatter.
Here is a look at some of the changes in regards to student loans:
- Students wanting federal loans will simply apply for the loan and their college will send the application directly to the government, who will make the loan.
- Students who qualify for the subsidized federal Stafford student loan will be charged no interest while the student is in school, and 4.5 percent after they leave, which is down from 5.6 percent.
- Students who attend college at least part-time can continue to borrow up to $12,500 a year through the unsubsidized Stafford program at an interest rate of 6.8 percent. Students are not obligated to make payments while they are in school, but the interest does accrue during their time in school.
- Students who consolidate loans with the government can register for the income-based repayment plan where payments are capped 15 percent below their income.
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