Stafford Student Loan News

As far back as 2001, Congress, looking at incredibly high interest rates on federal student loans (8.25% statutory maximum on the Stafford loan, 8.5% on the PLUS loan) decided to legislate a mandatory fixed rate of 6.8% on Stafford loans beginning July 1, 2006. At the time, it seemed like a good idea to legislators to try “fixing” market prices. Prior to that legislation, Stafford and PLUS loans had variable rates of 2.3% and 3.1% + the 91-day Treasury Bill rate at the last auction in the month of May.

Fast forward to today - 2008. With the economic uncertainty, the 91-day Treasury Bill’s current rate is a shockingly low 0.21% (as of noon 3/20/08). If Stafford loan rates were still variable rate loans and rates were set today, the Stafford loan would have a variable rate of 2.51% - lower than student loan interest rates have ever been. For students now paying 6.8%, a rate of 2.51% would mean paying about $50 less per month on $20,000 in federal student loans. Had Congress also left student loan consolidation alone (not reducing subsidies to lenders, thereby reducing availability of consolidation loans to students) that same rate change would mean paying 56% less interest for the life of the loan.

This is a lesson for all of us - when government attempts to manage free markets, unintended consequences may result, and those consequences may be financially quite harmful in the long term.

It is always wise to know what kind of loans you have borrowed, how much you owe, and who services your loans. Being knowledgeable about your loans now, will help you repay them later. Here are instructions on how to look up your Federal loans on the US dep’t of Education’s loan Database:

1. Start by visiting: NSLDS on the Web. Click on Apply Now.
Find federal loan information at pin.ed.gov

2. Read the privacy notice, then click Next.
Privacy notice about your federal loan information

3. Fill out the PIN form. Make sure you include a working email address.
Use your PIN to locate student loan data

4. Agree to the terms
Remember, to protect your privacy and reduce the possibility of identity theft, NEVER share your PIN, even with the Student Loan Network.
Get your PIN to access federal loan info
You’ll receive your PIN via email in about 2 days. Once you have your PIN, you’ll be able to log onto the NSLDS website and obtain your student loan information.
Your PIN allows access to the National Student Loan Data System

5. Visit NSLDS at http://www.NSLDS.ed.gov on the Web
NSLDS allows you to find student loan info

6. Read the privacy notice and click Accept
National Student Loan Data System for federal loan info

7. You’ll be asked what kind of encryption you want
If you are surfing the Web with Firefox, choose the left option. If you are surfing the Web with Internet Explorer, choose the right option. If you’re not sure, choose the one on the right.
Your student loan information is encrypted

8. Log in with your PIN and other identifying information
Your PIN provides access to the NSLDS

9. On your personal NSLDS homepage, you’ll be presented with a list of your loans and current status. Print this page.
The national student loan data system supplies your current loan info

10. For each of your loans, click on the blue number next to them and print the summary page about the loan.

One final word of caution: this change by the Department of Education may increase the potential for identity theft. Do not mail your information to any company that you did not request an application from!