Lower student loan rates!

[Drolefille]

House voting on student loan bill

Continuing its march through an agenda of popular legislative initiatives, the Democratic-led House is considering cutting interest rates on some college student loans in half.

The House was heading to a vote late Wednesday on the measure, which would help an estimated 5.5 million students who get need-based federal loans.

The government pays the interest that accrues on those loans while students are in college. Students pick up the payments after they leave school.

The rates would drop from 6.8 percent to 3.4 percent in stages over a five-year period under the House proposal. That would cost nearly $6 billion, according to the Congressional Budget Office.

Wooo hooooo! Hopefully this passes both House and Senate

[Kevin]

"Need Based" -- what exactly does that mean? Does that mean that since my father is in the top 1% of income earners but isn't paying for my school that I won't "need" the rate cut? Or does it just generally meant that all student loans are need-based?

I guess I could go find out on my own.

[Drolefille]

I believe they're all "need based" as far as governement loans... they just mean they aren't merit based. (Stafford loans are need based for example)

[Kevin]

Excellent. This is much needed after the recent Bush screw-job. To think... he'd attack one of the only federal entitlements which is in the end mostly profitable to the government. I guess our elected officials just do what their bosses at Chase-Manhattan tell them to do.

I voted for the guy twice and consider myself to be a solid conservative, but this move baffled me.

[Drolefille]

Well hopefully it passes, though I do understand the concern voiced in the article that lenders may avoid doing student loans if rates are too low. Democrats also pledged to increase Pell grants which go to the lowest income students.

[PeppyGPhiB]

Well, rates were that low just a couple years ago, when the federal reserve made all the interest rate cuts.

And yes, federal loans are need-based. They're talking about the ones people qualify for by filling out the FAFSA.

This is an example of legislation and appropriations that may cost money up front but is worth every penny in the end. Anyone with clear thinking understood why No Child Left Behind was a bunch of PR hooey...the students most impacted by it get the rug pulled out from under them when they try to go to college. We make them meet a bunch of federal standards for test scores, then we don't give them the money they need to get an education beyond high school anyway.

An educated society is a healthy one.

[SigKapSweetie]

HAH! Now I feel smart for not locking my rate in at 6.5%, which is what Financial Aid told everyone to do because 'the rates are only going to go up'.

[Kevin]

Originally Posted by SigKapSweetie

HAH! Now I feel smart for not locking my rate in at 6.5%, which is what Financial Aid told everyone to do because 'the rates are only going to go up'.

That's probably some of what the bank spammail you received told you. If your Financial Aid office told you that, I'd be surprised.

[PeppyGPhiB]

Right. Stafford loans are low-interest loans. They cap them I think at around 7% interest max. And i don't know about other schools, but i had no unsubsidized staffords for my undergraduate studies...maybe that changes in grad school?

[SigKapSweetie]

Oh, it was definitely our financial aid office. They had a presentation and everything. I got the feeling it wasn't the smartest idea, so I didn't do it, but I'm one of the few people in my class who didn't.

So if your in repayment of a student loan the rate you locked in at
when you first took it out will lower to the rate cut their proposing? or is it for new loans that students are taking out now?

[GeekyPenguin]

Originally Posted by Kevin

"Need Based" -- what exactly does that mean? Does that mean that since my father is in the top 1% of income earners but isn't paying for my school that I won't "need" the rate cut? Or does it just generally meant that all student loans are need-based?

I guess I could go find out on my own.

Dude, you are married AND over 21 AND in grad school - why are you even reporting your dad's income?

[Munchkin03]

The reduction only applies to subsidized Stafford loans. Luckily, I locked in at a lower rate back in June 2005, and after 3 years of on-time payments, I have a reduction of 1%. This would be great, however, if I was still in school.

GP is right. Dude, why are you even reporting your parents' income on the FAFSA? WHY?! If you have to fill out a supplemental report (as I had to for my individual department) I can understand.

[Stef the Pef]

Hey, if my dad had that much cash, I'd take all the "income" he wanted to offer me! Dude's lucky.

Unfortunately, my folks are retired and we're pretty dirt poor right now. Any little bit helps, so if this goes through, I'll be one thankful girl. (I just wish it applied to all my unsubsidized loans I took out pre-parents'-retirement, though! GRR.)

[Drolefille]

Subsidized Stafford Loan

This is a need-based loan.
Interest on the loan is paid by the federal government while you are in school, during your grace period, and during authorized periods of deferment.
During periods of forbearance, you will be responsible for interest that accrues on your subsidized loans.
The interest rate will be fixed at 6.8 percent.
You must be enrolled at least half-time to qualify.
Repayment of principal balance begins six months after you are no longer enrolled on at least a half-time basis.
Unsubsidized Stafford Loan

This is not a need-based loan.
You are responsible for paying the interest on your loan from the date of disbursement.
The interest rate will be fixed at 6.8 percent.
You must be enrolled at least half-time to qualify.
Repayment of principal balance begins six months after you are no longer enrolled on at least a half-time basis.


From my loan entrance counseling.

So technically the unsubsidized are NOT need based. Thus clarifying both the original article and others