Interest rates for school loans drop to record lows
May 30, 2003
Although tuition is expected to climb by as much as 9 percent next year, the government has reduced interest rates on federal loans for education. Effective July 1, the interest rates on Federal Stafford Loans will drop from 4.06 percent to 3.42 percent, the lowest rate since the program began in 1965.
For students still in school or within a six-month period after leaving, the interest rate will be 2.82 percent. Interest rates for Federal Parent Loans for Undergraduate Students will drop to 4.22 percent, also a record low.
The federal Department of Education announced the new rates Wednesday, which apply to loans granted on or after July 1, 1998.
Under a 10-year repayment plan, a student who loaned $10,000 could save nearly $400 in interest over the life of the loan, according to the department.
Although the interest rates are historically lower, Kay Lewis, director of the Office of Student Financial Aid, does not foresee an increase in the number of student loans at the UW.
"Students will continue to borrow just what they need," she said. "Interest rates are set every year, which means they could be higher next year, depending on the economy."
The new rates will be in effect through June 30, 2004. Calculated every May, interest rates on student loans are based on a percent added to the 91-day Treasury Bill -- government bonds sold on a weekly basis at a minimum of $10,000.
Depending on their situation and class standing, however, the new rates may not benefit all students who consolidate their loans, Lewis said.
"For students graduating this spring, right now would probably be a very good time to refinance their loans," she said. "For others, it might not make sense."
In loan consolidation, previous loans are combined under the terms of a new loan. It can be done through the government by the Federal Direct Loan Consolidation or with banks through Federal Loan Consolidation.
Lewis said the financial-aid office will soon mail information about loan consolidation to students.
"Loan consolidation is not for everybody," she said. "We want students to be able to make objective decisions."
Comments
Post a comment
You are not currently logged in. You must log in using your Facebook account to post a comment. It's fast, easy, and we don't store any of your personal information, except your first and last name when you post a comment.
Why?
Our old comment system was abused to leave racist, sexist, fradulent, or simply useless comments. We're hoping this verification step will improve the quality of our comments.
I don't have a Facebook account. I'd like to verify my identity using my MySpace/Google/Yahoo!/OpenID/SSN/주민등록번호/MasterCard.
Let us know. We're open to suggestions. Over the next few weeks, we'll be testing other authentication methods.
The FBI/CIA/TSA/CoS/Emmert is out to get me! I need to stay anonymous!
We're working on a way to allow this. If you have any ideas, email us.
I think this website is ugly.
It's going to be a work in progress all summer, so it may look and act differently from week to week. If you want to influence this process, email us. We read every email, and respond to most of them.