Mark the date if you have student loans or plan to take out student loans, major changes are in the works that will impact you on July 1, 2006. Every July 1st, the Federal Government resets the interest rates on Federal student loans, but this year is different. Not only will the rates on popular Stafford student loans increase from the current variable rate of 4.7% to a fixed 6.8% rate, but the government has enacted a handful of other laws that mean big changes for future and current students as well as students who have yet to consolidate their loans.
Which student loans are affected?
The student loans that will be affected are those that are part of the Federal
Student Loan program such as the Stafford Loan, the PLUS (Parent Loan for
Undergraduate Students) loan, the Consolidation Loan, and the Perkins Loan. Each loan type has a cap on the rate of interest that can be charged. While not at their federally enforced cap, interest rates on student loans will hover dangerously close after July 1st, 2006. PLUS loan rates will jump from a variable 6.1% interest rate to a much less attractive fixed rate of 8.5%, just half a point below the...
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