3 Things You Should Know About New Student Loans
Members of Congress have been debating over how to handle student loan debt and interest rates for several months; even years. And at the end of July, new legislation – a bipartisan compromise – passed through the Senate not long after the House of Representatives passed a similar bill.
There are small differences between these bills, but experts expect that these differences will be resolved and the legislation will move forward and take effect soon.
But what does this new legislation mean for students borrowing for their education? We want you to be in the know, so we’re sharing the top three things you need to know about the House and the Senate bills.
1. Interest Rates for Students Are Lower: Interest rates will be tied to the market-set rate of Treasury Bonds. In layman’s terms, this means that interest rates will be lower. Come fall semester, those borrowing could see interest rates as low as 3.4 percent for Stafford Loans.
2. Interest Rates Will Be Capped: Rates will vary for many students. But thanks to this latest legislation, it will not go above 8.5 percent. Both Democrats and Republicans seem to agree on this cap and it should become effective.
3. There’s No Guarantee These Rates Will Hold Through Next Year: While students entering school this fall will be able to access these lower interest rates for their student loans, those looking to borrow next year may have to deal with interest rates as high as 6.8 percent. Fortunately politicians are working to do more for student loans and student debt in the long run.
The debate continues, and changes to student loans will continue as well. Be sure to consult your college to make sure that you have everything you need to manage your loans and debts, and look for opportunities to test out of classes with the DSST Credit by Exam program to avoid borrowing more than you have to.