Interest rates for student loans to drop on July 1
The interest rate for federal student loans will drop significantly on the first of next month - a Christmas present in July for current and prospective college students as well as parents. The Stafford loan for prospective students and current students who first obtained the funds on or after July 1, 1998, will drop from 8.19 percent to 5.99 percent. The PLUS loan rate for parents, who get college funds for their offspring, will drop from 8.99 percent to 6.79 percent.
Borrowers won't have to contact their lenders to get the new rate, but will see an automatic drop in payments as of July 1.
"This is the lowest the rate has been since 1967, two years after the program's inception," said Ruth Vincent, director of the Georgia Higher Education Assistance Corporation (GHEAC). "The reduced interest rates mean that a student with a Stafford loan will save $220 on each $1,000 of a standard 10-year repayment contract," she said. The change is determined by the rates set for the treasury bills by the Federal Reserve.
The tax bill passed this year by the U.S. Congress also provides savings in the cost of higher education by increasing the tax deduction for interest on student loans. The new law, effective next year, says students can claim all interest paid on the loan each year until it is repaid or until the tax changes are re-examined in 2011.
GHEAC, the state's designated guarantor for student loans, is a division of the Georgia Student Finance Commission (GSFC), which administers Georgia's HOPE Scholarship Program. GHEAC provides guarantee and support services to schools and lenders throughout Georgia.
Another GSFC division, the Georgia Student Finance Authority, makes Stafford and PLUS loans for college and university expenses and will be using the new lower rates.
More information on student loans is available by calling 770-724-9030 in metro Atlanta, toll-free 800-776-6878 or at the Web site, www.gsfc.org.
# # #