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.
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.