Federal Student Loans Get Cheaper, Easier
2010 brings lower interest rates, easier application and repayment rules
By Kim Clark
Posted June 14, 2010
Because states have been cutting back on scholarships while hiking tuition, more students are having to borrow to fund college. Luckily, at least some federal student loans are getting cheaper, easier to get, and easier to repay.
[Read about how government rule changes will affect federal parent loans.]
Easier application: While students will still have to fill out a Free Application for Federal Student Aid, starting July 1, students who want a federal Stafford loan need only ask their college. They no longer need—or have the opportunity—to shop for a bank to make a federally backed loan.
[Read more on how on reforms will affect students.]
Cheaper: Congress has lowered the interest rates for student Stafford loans awarded to those who qualify as needy. In the 2010 academic year, which starts July 1, students who qualify for the "subsidized" federal Stafford student loan will be charged no interest while the student is in school, and just 4.5 percent after they leave. (They will also pay an up-front fee of 0.5 percent of the value of the loan.) In the 2009 academic year, the government charged 5.6 percent in after-graduation interest on subsidized Stafford loans. The government makes subsidized loans to students whose FAFSA shows they cannot afford the full cost of their college, and who don't receive enough scholarships and other aid to make up the difference between the cost and what they can afford.
