It wasn’t long ago that I sent a weekly tip regarding the legislation that locked the interest rate on all Stafford Loans [taken out after 7/1/06] at 6.8%. Well …
This week [expected tomorrow], the new House of Representatives leadership plans to introduce legislation that would cut the interest rate on certain student loans in half!
The Project on Student Debt has prepared a brief analysis of this bill, which would reduce interest rates on Federal Subsidized Stafford Loans for undergraduates from the current 6.8% to 3.4% over the next five years. When fully phased in, borrowers on a 10-year repayment plan would see their payments reduced by 14% and save $4,000 in interest costs on $20,000 in covered loans.
The proposed interest rate phase-in would occur according to the following schedule:
6.12 percent in 2007
5.44 percent in 2008
4.76 percent in 2009
4.08 percent in 2010
3.4 percent in 2011 and subsequent years.