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How Will New Student Loan Interest Rates Affect You?

If you follow the news, you may have heard that interest rates for student loans increased in July. Not good news if you’re on a budget and try to pay all your bills on time. On the other hand, this isn’t the scary news that some headlines make it seem. First of all, loan interest rates are reviewed every spring and set each July. Also, this year’s hikes weren’t crazy high.

These are the old and new rates:

                                                                                Old Rate                                               New Rate

Undergraduate Stafford                                         3.76%                                                     4.45%

Graduate Stafford                                                  5.31%                                                     6.00%

Direct PLUS                                                          6.31%                                                     7.00%                

 

While any bump in interest that takes money out of your pocket is a bad thing, these numbers shouldn’t break the bank. If you took out the maximum allowed annual Stafford loan of $5,500 this year, you’d wind up paying less than $2 more a month. That’s only about $215 over the life of a ten year note. And there was actually a decrease in origination (processing) fees this year, but that savings doesn’t add up to more than a few cents.

What might be important for you to note, though, is that there seems to be a shift in philosophy surrounding student loans, in general. The new Secretary of Education Betsy DeVos pulled back some of the consumer protections for student loan borrowers. Under the previous administration, companies that serviced loans had to adhere to strict guidelines about the records they kept and how they handled payment processing, complaints, communication, income-driven repayment plans, and errors. How much they got paid by the Federal government was dependent on how well they did their jobs.

It’s easy to understand why there’s so much confusion about student loans. In addition to those screaming headlines about rate hikes, there are debt relief scams all over the internet that make crazy claims about how you can avoid paying your loans. If you’d like to learn the truth, you can contact the Federal Government directly or give the Financial Aid experts at Charter College a call at: 888.200.9942 today. We’ll answer your questions about how you might pay for your education.

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