Changes In Student Loan Program
Deficit Reduction Bill (S1932) Signed Into Law On February 8, 2006.
Interest rates for federal loans will change from variable to fixed beginning July 1, 2006. Stafford student loans will be fixed at 6.8% and PLUS loans will be fixed at 8.5%.
In addition, graduate and law students may borrow through the PLUS loans starting July 1, 2006. This will reduce the need to take private loans which are based on credit worthiness or securing a co-signor, and typically carry a higher interest rate. PLUS loans which are guaranteed by the government were only available for parents in the past.
Graduate and law students may take advantage of the Grad PLUS loan, with no annual or aggregate loan limits (other than Cost of Attendance less other financial aid), and a credit review requirement.
Starting July 1, 2007, which affects the 2007-2008 award year, annual loan amounts will increase for freshman from $2625 to $3500 and for sophomores from $3500 to $4500. Graduate and law students' annual Unsubsidized Stafford loan limits will increase from $10,000 to $12,000. This will increase the annual Stafford (both subsidized and unsubsidized) loan limits to $20,500 starting July 1, 2007.
Consolidate Federal loans before July 1, 2006.
Federal loan consolidation is heating up again this spring. Those with eligible federal student loans should consider consolidating those loans by applying for a Federal Consolidation Loan before July 1, 2006. Here is why:
- The current upward trend in the 91-day Treasury bill indicates rates will be higher on variable rate Federal Stafford Loans when the rate is reset on July 1.
The 91 day Treasury bill has increased nearly 1.5% over the rate that was used to set Federal Stafford Loan interest rates for the period July 1, 2005 to June 30, 2006. - Students who are not graduating prior to July 1, 2006, will no longer be eligible for in-school consolidation, beginning July 1, 2006.
Due to a provision in the recently enacted Deficit Reduction Act of 2005, effective July 1, 2006, in-school borrowers will no longer be able to request early loan repayment on any of their federal education loans in order to make them eligible for consolidation in the FFELP Federal Consolidation Loan program.
For More Information
Please direct any questions regarding federal financial aid to the Washburn University Financial Aid Office at 785-670-1151 or 800-524-8447.
Specific loan questions may be directed to Jennifer Hill, jennifer.hill1 [at] washburn.edu.
