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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