July 1 is always an important date for students with federal loans, for good or ill, because it’s when interest rates and other and other terms change each year. This year, things appear to be looking up. According to the Project on Student Debt, here are some of the main changes that went into effect today:
- Rates go down on new Stafford Loans: The fixed interest rates for these loans will drop nearly 1 percent, from 6.8 percent to 6 percent. These loans go mostly to families with incomes under $80,000. Fees for Stafford Loans also dropped to 2 percent of the amount borrowed.
- More loan funds become available: Undergraduates can borrow an additional $2,000 each year in unsubsidized Stafford loans. Also, students who are interested in teaching can borrow another $4,000 a year, up to four years.
- Public Service Loan Forgiveness: This is a new federal program that will forgive remaining federal student loan debt after 10 years of qualifying for loan payments and eligible full-time employment. The program is designed for people whose income is low relative to their debt for at least some of their time while in a public service job.
- Borrowers with variable-rate loans can lock in new loan rates: This year, the variable interest rates are decreasing to 4.21 percent — three percentage points less than the previous rate. For class of 2008 graduates, borrowers can lock in an even lower rate at 3.61 percent, if they consolidate loans within six months.