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Student Loan Interest Rates to Hit Low
Thu May 29, 3:13 AM ET Add U.S. National - AP to My Yahoo!
WASHINGTON - Interest rates on college student loans will drop to their lowest levels ever this summer, the Education Department said.
The rates will fall from 4.06 to 3.42 percent on July 1, the lowest since the program began in 1965, the department announced Wednesday. The new rate applies to annually adjusted loans issued beginning in 1988.
For students still in school, in their six-month grace period after graduation or in deferment, the rate will be even lower: 2.82 percent. The Parent Loan for Undergraduate Students will be reset at a new rate of 4.22 percent.
"Record low loan interest rates may make the difference for many students considering whether to pursue post-secondary education," Education Secretary Rod Paige said in a written statement.
Under a 10-year standard repayment plan, borrowers with $10,000 in student loan debt can save nearly $362 in interest over the life of the loan.
The department announced earlier this month that it would postpone processing applications to consolidate loans through the William D. Ford Federal Direct Loan Program to allow borrowers to take advantage of the new rates.
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