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On Campus
Jul 08, 2008, 09:57AM

Government Steps In To Help Student Loans

For once the government has done something useful. In an attempt to insulate education from the growing turmoil in the U.S. credit market, changes implemented by the federal government will help keep loans affordable and even reduce the cost of current loans.

Changes in the federal student aid program that took effect Tuesday will lessen interest rates for some students while increasing the amount they can borrow.

Among the biggest changes, the interest rate on new, subsidized Stafford loans to undergraduates drops from 6.8 percent to 6 percent.

Subsidized Stafford loans are awarded to lower-income students, and the government picks up interest payments while students are still in school.

The rates are slated to continue to decline in stages over the next five years, part of congressional measures approved last year to increase student aid. Earlier this year, responding to the credit crunch, Congress also approved $2,000-per-year increases in what students can borrow from unsubsidized Stafford loans, which students can take out regardless of income.

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