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Interest Rates on Certain Federal Student Loans Slated to Increase

April 12, 2012 | Adam S. Minsky, Esq. Policy & Reform

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Interest rates on certain newly-originated federal student loans have been low over the past few years thanks to the College Cost Reduction and Access Act of 2007 (the same law that created Income Based Repayment). This law gradually cut fixed interest rates on newly-originated subsidized federal Stafford loans for undergraduate students from 6.8% down to 3.4% over the past 5 years. On July 1, 2012, these interest rates are slated to return to 6.8% for new federal student loans, making them significantly more expensive.

This change will not have any impact on graduate student borrowers or borrowers who have already entered repayment. It will, however, lead to thousands of dollars in additional interest charges for undergraduate students who take out new subsidized federal Stafford loans starting July 1, 2012. Not exactly a way to reduce student loan debt burdens for college students. There have been a couple of bills introduced into Congress to try to prevent these interest rate hikes from happening, but their chances of passage are unclear.

To read more about these changes, click here.

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Policy & Reform

About Adam S. Minsky, Esq.

Adam S. Minsky founded the first law office in Massachusetts devoted entirely to assisting student loan borrowers, and he is one of the only attorneys in the country practicing in this area of law. He provides counsel, legal assistance, and direct advocacy for borrowers on a variety of student loan-related matters. He regularly speaks to students, graduates, and advocates about the latest developments in higher education financing.

Books by Adam S. Minsky

The Student Loan Handbook for Law Students and Attorneys

The Student Loan Handbook for Law Students and Attorneys

Student Loan Debt 101

Student Loan Debt 101: The Definitive Guide to Understanding and Managing Your Student Loans

Student Loans for Parents and Cosigners

The Student Loan Guide for Parents and Cosigners

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asminsky@minsky-law.com
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Boston, MA 02110

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