Happy first day of summer! It's beautiful where I am, so I should be working outside. I just got home from presenting at a freshman registration session at our school, which reminded me that I need to point out some more legislative changes regarding student loans. The side benefit is that I get to hear the Cub game as I write this.
In my last post I outlined the federal student loan interest rates. However, there is clarificiation to some differences in student loan rates depending on which type of loan you take. This is especially important for those who take both a subsidized and unsubsidized student loan.
For undergraduates: Effective July 1 2008, subsidized loans have the fixed 6.0% interest rate for loans made on or after July 1, 2008 and before June 30, 2009. The unsubsidized loan interest rate remains at a fixed 6.8%.This is for both the FFEL and Direct lending loan program. So, if you take out a subsidized Stafford Loan of say, $3500, and the new additional unsubsidized loan of $2,000, you will be repaying your loan at two different interest rates. Sound crazy? I think so. In the 24 years I've been in this profession, this is the first time I can remember any difference in interest rate between the two types of loan.
For graduates: your loan(s) will remain at the 6.8%, regardless of whether the loan is subsidized or unsubsidized.
For parents: The parent PLUS loan interest rate will be 8.5%. As in the past, repayment of a PLUS loan begins 60 days after the last disbursement of the loan. New legislation (effective July 1) is now allowing parents to request a deferment of PLUS repayment until the student graduates or ceases to be a half-time student. This is not automatic. If your parent wants to defer the PLUS repayment, he or she must request the deferment with the holder of the loan. Keep in mind that your parent will accrue interest while the loan is in deferment, so repayment after the 60 days is still the best option if affordable. This is for PLUS loans disbursed on or after July 1, 2008.
Back to student loans. Every year the new interest rate is set on student loans. It's very important that you keep track of your loan paperwork to ensure that you are paying the correct interest rate. You may not think much of it now, but your repayment amount on these loans may decide whether or not you consolidate into one repayment at a different interest rate after you graduate.
Enjoy the longest day of the year! I'm off do to some gardening.