06.13.08 | Interest Rates
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.
So… I do have a 6.8% Stafford Loan issued after July 1, 2006. It was issued August ‘06 and January ‘07. So… my loan will NEVER reset to a lower rate? Why not? What was the thought process behind this? Was Stafford thinking they were protecting us by fixing the rate at 6.8%? Protecting us against an environment of rising interest rates? That’s the only thing I can think of. This is a big shock.
July 2nd, 2008 | #
all i have to say is WTF*** this is supposed to help students that are recent graduates? NOT!
July 2nd, 2008 | #
so much for helping incomming college freshman..the interest rates should have been lowered for ALL college students who need the stafford loans…we’re ALL being hit hard by inflation while trying to figure out how to pay for our college education - thanks for not including us.
July 6th, 2008 | #
I don’t understand why this will only apply to students who took loans out some time ago. Some time ago when college costs were lower for those students, travel costs were lower for those students, those students were most likely not charged origination fees (which even though I signed up for my loans in april when my lenders website boasted no origination fees and no default fees, they will be charging origination fees of at least 1% and told me they are subject to change at any time! what about us new students who are just struggling to pay for gas today!!!! Why is the mortgage crisis now our problem????
July 7th, 2008 | #
Rates were fixed last year as they were going up to insure students would not pay higher rates in the future. Subsequently, rates have come down. It is all relative - right?
Anyway, rates for “undergraduate students’ taking out the subsidized Stafford loan will drop to 6% and remain fixed for the life of the loan. For projections, see:
http://www.staffordloan.com/stafford-loan-info/interest-rates.php
July 10th, 2008 | #