Posted by Madison on June 25, 2009
Great news for those of you with student loans! On July 1, the interest rates on Stafford loans and PLUS loans will drop to an all time low!
Here’s what the new rates will look like:
- Stafford loans in in-school or grace period status: 2.00%
- Stafford loans in repayment: 2.50%
- PLUS loans: 3.38%
This is great news for those of you who missed consolidating 5 years ago when you could get a rate as low as 2.77%. (We locked ours in at 3% with Utah Higher Education Assistance Authority (UHEAA) and used it for our house, which is much cheaper than any mortgage.)
You can consolidate at Federal Direct Loan Consolidation to lock in the rate, but the rates are only good if you got your loans before July 1, 2006. There are lots of other exceptions, too, so read the fine print. Student loan interest will be reported on form 1098.
In addition, on July 1, the College Cost Reduction and Access Act law will cap student loans at 15% of adjusted gross income. Loans are dropped completely with 10 years of public service.
By the Numbers
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the drop in student loan rate is just in time in the upcoming academic year. I just hope that there is no catch in this offer 😉
I’m a little confused by this. I called my bank (WF) to ask about this as I have over 100k in fixed rate student loans (some of the loans are are 4.5, the rest at 3.96%) They had no idea what I was talking about, so how would I go about (if possible) doing this? Or do I have to wait till July 1 before even talking to my bank? Thanks.
I don’t think the new rates have been officialy declared. I was in the process of consolidating my loans in June but my consolidation was frozen until the new rates were declared in July. My pending consolidation would have locked in my mixture of fixed and variable rate loans at my average interest rate of 3.5%. I did get the lower rates 5 years ago but some of the variable interest rate loans had been rising. If the new declared rates are actually lower I can use the new lower interest rates. However, I also have until July 31st to lock in at my average rate. FYI, the website for Federal Direct Loan Servicing Online is http://www.dlssonline.com