by Guest Author: Todd Weaver of Strategies for College
The 113th Congress has agreed on something!
Yes, it’s true!
The Bipartisan Student Loan Certainty Act of 2013 passed the House and Senate earlier this summer. After all of the moaning and groaning from both sides of the aisle, the Higher Education Act of 1965 has been amended (again) to address the changes to the Subsidized Stafford Loan that went into effect on July 1, 2013.
The passage of H. R. 1911 established a new formula for setting the interest rates on Federal loans to students and parents for the upcoming year and will be retroactive to July 1, 2013.
For Undergraduate students, Federal student loans (also known as Stafford Loans) disbursed after July 1, 2013 (the beginning of the academic year at colleges across the country) and up to June 30, 2014, will have an interest rate of 3.86% for the life of the loan. This will be for both subsidized and unsubsidized loans.
Graduate student loans through the Stafford program are set at 5.41% for the life of a loan disbursed after July 1, 2013.
Parent Loans for Undergraduate Students (PLUS loans) for the 2013-2014 academic year, will have an interest rate of 6.41%.
No confirmation yet on if the origination fees will be updated. Due to Sequestration, the origination fees for the Stafford Loans (1.051%) and for the PLUS Loans (4.204%) were adjusted on March 1, 2013.
The question remains: what happens for the next academic year? As the bill is written, future academic years will tie the interest rates to the 10 Year Treasury Note based on the price set on June 1 each year. The interest rates will be capped on Stafford loans for undergraduates at 8.25% and for PLUS loans for parents at 10.5%.
Show me the money!
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