May 29, 2008

Interest Rates change July 1, 2008 for Federal student loans

Posted in Misc at 12:02 PM by Joe From Boston


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

Loan Type

Grade Level

Program

Direct Loans

FFEL

7/1/2006 to
6/30/2008

7/1/2008 to
6/30/2009

7/1/2006 to
6/30/2008

7/1/2008 to
6/30/2009

Subsidized Loans

Undergraduate

6.80

6.00

6.80

6.00

Graduate

6.80

6.80

6.80

6.80

Unsubsidized
Loans

Undergraduate

6.80

6.80

6.80

6.80

Graduate

6.80

6.80

6.80

6.80

PLUS Loans

All

7.90

7.90

8.50

8.50

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.

Loan Type

Status

Program

Direct Loans

FFEL

7/1/2007 to
6/30/2008

7/1/2008 to
6/30/2009

7/1/2007 to
6/30/2008

7/1/2008 to
6/30/2009

Subsidized Loans

Repayment or
Forbearance

7.22

4.21

7.22

4.21

In-school, Grace,
or Deferment

6.62

3.61

6.62

3.61

Unsubsidized
Loans

Repayment or
Forbearance

7.22

4.21

7.22

4.21

In-school, Grace,
or Deferment

6.62

3.61

6.62

3.61

PLUS Loans

All

8.02

5.01

8.02

5.01

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10 Comments »

  1. I’m extremely impressed along with your writing skills and also with the layout in your blog. Is this a paid subject matter or did you customize it your self? Either way keep up the nice quality writing, it?s rare to look a great weblog like this one these days..

  2. Helen – visit this link, it should explain everything:

    http://ifap.ed.gov/eannouncements/0527InterestRate20082009.html

    Make sure you know whether you have Direct or FFELP loans.

    As to the “why”, it’s because Congress deemed it to be so. Changing interest rates for Federal loan programs literally takes an act of Congress.

  3. Helen said,

    According to your response to Jenny regarding her mother’s Parent Plus Loan’s repayment rate, you state: “Yes, PLUS Loan repayment rates dropped to 5.1% on July 1st.” Why then, am I still paying 6.125%, 8.5% and 7.9% on Parent PLUS loans dispersed in 2005, 2006, and 2007? And why are new Parent PLUS loans after July 1, 2008 still at 7.9%. Where does the 5.1% come into play?

  4. Hi Jenny,

    Yes, PLUS Loan repayment rates dropped to 5.1% on July 1st.

    Interest rates for PLUS and Stafford loans are changed by an act of Congress and are typically changed every July 1st as Congress sees fit.

  5. Jenny Roach said,

    My mother’s Plus loan dropped to 5.01 on July 2008. We don’t understand. Please ex[;ain what factors determine the interest rate changes for Parent Plus Loan

  6. And Carol, don’t forget to look into scholarships – scholarships don’t have to be paid back so they are your BEST option by far!!!

  7. Carol,

    Your son has a Subsidized Stafford Loan. There are both Subsidized and Unsubsidized Stafford Loans.

    If you are denied a PLUS loan, then your son at the four-year school is likely eligible for the Unsubsidized Stafford Loan. Students can borrow up to $6,000 in Unsubsidized Stafford loans, though the exact amount will be determined by your school.

    So get a copy of your PLUS denial letter and call your son’s school right away!

  8. Carol said,

    Does this mean that if we have a stafford loan set for this fall for my freshmen son that he could be eligible for a bigger loan amount? He already has the $3,500 for this year in subsidized. Will be higher also?

  9. Hi Sasha,

    As it says above, variable rates are dropping to 4.21% for variable rate loans in repayment, which I’m assuming you are..

  10. Sasha said,

    I haven’t consolidated yet. Are the variable unsubsidized stafford loans in repayment going up or down July 1?


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