Student Loan Rates Reset Lower, But Probably Not For Long
Career College Central Summary:
The federal government is on track to bring back low rates on government-backed college loans before classes begin in the fall—and these rates will be retroactive to July 1, when the old program expired.
One in three adults are currently helping or planning to help pay for a child’s higher education, and 71% are worried about how they will cover the cost, according to a Main Street survey out today. Of those saving for college, 79% are parents and 10% are grandparents—and they are managing to put away an average of $6,850 annually towards college.
Under the new bill, the interest rate for undergraduates will be set 2.05 percentage points above the yield on the T-bond, bringing the rate right now to 3.86% instead of the arbitrary 3.4% rate in force for many loans last year and the 6.8% rate that went into effect in July, when the old program expired.
Congressional researchers project the rate on new loans for undergraduates would be 4.62% for loans taken out next year and 7.25% for loans taken out in 2018. The bill caps the rate at 8.25%. As rates rise, so will the cost of servicing college loans—pretty much guaranteeing that the student debt crisis won’t go away for some time.
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