Stafford Student Loan News

Just a reminder for folks who have waited a little longer before applying for federal financial aid - the FAFSA is a required form that must be completed and filed prior to receiving any federal financial aid, including the Stafford loan. If you haven’t filed your FAFSA, pretty much your only option is a private student loan, which typically has fewer advantages than federal student loans.

Filing your FAFSA takes a relatively short amount of time for the benefits it delivers - file today if you haven’t already done so.

To clear up some confusion…on July 1, 2008 interest rates are decreasing by approximately 3%…BUT only for Stafford loans that were disbursed prior to July 1, 2006…so if you have Stafford loans at 6.8% , these will not be affected by the rate drop. If you just recently graduated, your loan portfolio probably looks like this:

Stafford loan for $2625 from 2005 @ 6.62% variable

Stafford loan for $3500 from 2006 @ 6.62% variable

Stafford loan for $5500 from 2007 @ 6.8% fixed

Stafford loan for $5500 from 2008 @ 6.8% fixed

So on July 1, 2008, the loans at 6.62% will drop to 3.6%, but the loans at 6.8% will remain the same. If you consolidate the 4 together, the weighted average rate will be 5.75%…for the life of the loan. This model is only true for those in their grace period.

If all your Stafford loans are at 6.8%, you will not be affected by the rate drop whatsoever.