According to US Dept. of Education, here are the interest rates for loans disbursed on or after July 1, 2008:

Fixed Rates for Loans First Disbursed on or After July 1, 2006

Variable Rates for Loans First Disbursed Between July 1, 1998 and June 30, 2006

These rates were calculated based upon statutory formulas and equal the bond equivalent rate of the 91-day Treasury bills auctioned on May 27, 2008, plus certain statutory percentage add-ons. The 91-day Treasury bills were auctioned at 1.905 percent, rounded to 1.91 percent.

Inside Higher Ed has a great article on the recently-passed GI Bil updates which are includes in an War Spending Bill.  Click here to read the entire article.  Here’s an excerpt:

Despite a veto threat from President Bush and with the presumptive Republican candidate to replace him in absentia, the U.S. Senate on Thursday approved legislation that would dramatically enhance educational benefits for veterans of the conflicts in Iraq and Afghanistan. And it did so, supporters of the measure were quick to note, by a margin (75-22) that could comfortably override the president’s veto. The legislation will now go back to the House, which passed a parallel bill last month but failed to muster a similar veto-proof margin.
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veterans who have served on active duty since September 11 would receive payments covering tuition — up to the cost of in-state tuition at the most expensive public college in a veteran’s state — room, board, fees, and educational costs, plus a $1,000 monthly stipend. That is significantly more than former service members are now eligible to receive under the current Montgomery GI Bill, which was enacted in peacetime and does not come close to covering the cost of attending the typical public university.
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President Bush has promised to veto the supplemental spending bill, mainly because it contains billions of dollars for domestic programs (including the veterans’ education benefits) that he argues has no place in a supplemental spending bill designed to provide funds for the war. The White House’s Statement of Administrative Policy expressing its opposition to the measure sought to make clear that the administration supports expanding educational benefits for veterans, citing its support of an alternative measure introduced last month by Sen. John McCain of Arizona and other Republican leaders.

I just sat in on the conference call from Sallie Mae (to the world at large, it seemed). Here are some highlights of what I heard:

• CEO Al Lord announced that Sallie Mae will remain in the business of federal student loans for now, said that “Economics are barely okay.”
• Sallie Mae will commit to lending for the 2008-2009 season, which is through June 30, 2009
• They may return to lend at schools they’d previously dropped
  
• The apparently made their decision at 1:08 pm today
• They are staying in the FFELP program because of the government’s favorable announcement earlier today of 1% referral fee + $75 per loan profit for all lenders
• They asked everyone to call Congress to protect their servicing business (i believe with the currently proposed scheme, when the Dept of Ed buys the loan, they intend to service it)
  

According to the San Diego Business Journal, CIT has closed down it’s student lending company Student Loan Xpress.

Also, there are rumors swirling around that Sallie Mae may drop out of the FFELP lending program, leaving millions of students in the lurch.

The Chronicle of Higher Education is reporting that executives at Sallie Mae are eagerly waiting new lender rules from the Department of Education which are expected to be unfavorable to lenders. They report that:

“Sallie Mae executives, including the company’s president, C.E. Andrews, and chief executive, Albert L. Lord, have scheduled a conference call with colleges for Wednesday to discuss “critical information” about the lender’s participation in the federally guaranteed student-loan program, according to a company announcement.

Sallie Mae officials have not explicitly described any plan to stop issuing government-backed federal loans, though several officials involved in student lending—who asked not to be identified by name because of the uncertainty, highly fluid nature, and huge stakes involved —have described company officials as promising to take that step if the Education Department offers terms they deem inadequate today. Sallie Mae officials declined to comment on the record.”

In a major “oops” moment, Sallie Mae accidentally mis-labeled some accounts delinquent causing these customer’s credit ratings to suffer as a consequence of the lender’s screw-up.

Read the full article from the Pittsburgh Post Gazette or read the excerpt below.

As many as 1 million student loan borrowers from Sallie Mae may have found that their credit scores plunged after the loan company erroneously reported they were delinquent in their payments.

Tom Joyce, senior vice president of corporate communications for Sallie Mae, said yesterday that the lender discovered Friday that a recent download of account information to one of the credit bureaus, Equifax, included a computer code that caused some accounts to be considered delinquent when they were not.

…

some reported sudden drops of more than 100 points in their credit score.

…

No one should be suprised by this latest development, as highlighted by a recent Washington Post article. You can read an excerpt of the article below, or read the whole article by clicking here.

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One of the first things that pops up if you check YouTube to find out about a public school in Western Maryland is a video that starts: FROSTBURG STATE UNIVERSITY. ITS GREAT!!! An edgy new-wavy punkish Electric Six song cranks in, and the camera lurches as people down shots, chug beer and do keg stands. One guy climbs unsteadily out a window, grins at the camera, then drops through the dark to the ground far below.

Not exactly the image the school wants to broadcast. And that’s nothing compared with some of the videos at other universities, which show fights, racist costumes, weird hazing rituals and everything else that’s ugly about college life. All playing out on a site that gets hundreds of millions of viewers a day, many of them smack dab in the school’s target market.

Now Frostburg, like a growing number of schools, is trying to elbow its own messages onto such sites as YouTube to promote themselves, create a virtual community and drown out embarrassing clips.

“Marketing in higher education is really at a crossroads,” said Nora Ganim Barnes, director of the Center for Marketing Research at the University of Massachusetts Dartmouth. “Those that don’t engage and manage social media are going to be left behind.”

…

But like a parent trying to seem cool, sometimes the efforts are painful to watch. “The last thing someone on YouTube wants to see is a provost explaining the academic offerings at an institution,” Hawkins said.

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Read the whole article at the Washington Post website.

The President signed the bill this afternoon. Here are some aspects that might affect you:

Stafford Loans:

• Changes apply to loans disbursed on or after July 1, 2008
• It raises annual borrowing limit for unsubsidized Stafford loans for dependent undergraduate students (or students whose parents can’t obtain federal parent loans because of poor credit) by $2,000 to $6,000 for 1st year& 2nd year, and to $7,000 for 3rd, 4th and beyond.
• It increases the aggregate amount an undergraduate dependent student may borrow under the unsubsidized Stafford loan program to $31,000.
• It increases the annual borrowing limit for unsubsidized Stafford loans for independent undergraduate first and second year students (or students whose parents can’t obtain federal parent loans because of poor credit) by $2,000 to $6,000
• It increases the maximum annual amount for undergraduate independent students who have completed two years of study also by $2000 to $7000.
• It increases the aggregate amount of unsubsidized Stafford loans for an undergraduate independent student to $57,500.
• It provides for a period of deferment until 6 months after the child on a PLUS loan drops below half time or graduates.

There are several other provisions I won’t get into here, such as Lender-of-Last-Resort and creating an artificial secondary market for student loans at the taxpayers’ expense.

I don’t have exact details in front of me, but if Pres. Bush signs the new education bill, Stafford Loan annual limits and aggregate limits will go up.

Rumor has it that Stafford loans will go up by about $2000, meaning you’ll be able to borrow over $5000 as a freshman undergraduate – I do not have the exact figure yet, though, so stay tuned.

The interest rates will NOT change.

Last week, botht eh Senate and the House passed teh “Ensuring Continued Access to Student Loans Act of 2008” and it’s heading to President Bush’s desk next.  Bush has already indicated he will sign it.

I need to tell you that I have problems with this legislation.  Like most knee-jerk legislation, it’s a band-aid.

In simple terms, this bill will permit the federal government to purchase loans from lenders, essentially creating what’s called a “secondary market” – a market where lenders can bundle and sell loans to other companies , a common practice.

BUT – in this case it’s a false secondary market as it’s the taxpayers who will be fitting the bill.

My message to Congress – your legislation last year helped create this situation.  While the federal government seems to think it’s OK to operated at a net loss, private industry MUST make a profit in order to function.  It’s just basic economics.