2008 Woodie Awards
Federal law revamps college aid policies
Subsidized student loans will soon have lower interest rates
By: By Pamela Yip - The Dallas Morning News
Issue date: 11/1/07 Section: News
- Page 1 of 3 next >
DALLAS - A new federal law revamping education financing provides good news for students eligible for financial aid: Interest rates on subsidized student loans will be cut in half over the next four years.
"The financial aid package gets better for those who are eligible for need-based financial aid, since interest rates are dropping," said Joseph Hurley, chief executive of http://www.savingforcollege.com, a Web site on college financing.
The College Cost Reduction and Access Act, which President Bush recently signed into law, has been called the largest overhaul of aid to college students since soldiers returned from World War II battlefields and headed into the classroom.
While it doesn't change the strategy and approach that families should take when shopping for college financing, it will give them more benefits to go with the financial aid options that are available.
Major provisions of the new law include:
Pell Grant increase. Recipients of the popular federal Pell Grant will see a gradual increase in the annual limit over the next five years. This is big news for students.
"Lower-income students increasingly have had to rely on loans because need-based grant aid has not kept pace with college costs," said the Project on Student Debt, a nonprofit organization working to make higher education more available and affordable for people of all backgrounds.
Under the new law, the annual limit on federal Pell grants will rise from the current level of $4,310 to $5,400 in 2012.
Tuition and fees at four-year public colleges averaged $5,836 in 2006-2007, up 6.3 percent from the previous year, according to the College Board.
The new law also expands eligibility for the Pell Grant.
Interest rate cut. The law phases in a reduced interest rate on new subsidized federal Stafford loans to undergraduate students. The rate will be reduced from the current 6.8 percent to 6.0 percent starting in July, 5.6 percent in July 2009, 4.5 percent in July 2010 and 3.4 percent starting July 2011. In July 2012, it will revert to 6.8 percent unless Congress acts.
"The financial aid package gets better for those who are eligible for need-based financial aid, since interest rates are dropping," said Joseph Hurley, chief executive of http://www.savingforcollege.com, a Web site on college financing.
The College Cost Reduction and Access Act, which President Bush recently signed into law, has been called the largest overhaul of aid to college students since soldiers returned from World War II battlefields and headed into the classroom.
While it doesn't change the strategy and approach that families should take when shopping for college financing, it will give them more benefits to go with the financial aid options that are available.
Major provisions of the new law include:
Pell Grant increase. Recipients of the popular federal Pell Grant will see a gradual increase in the annual limit over the next five years. This is big news for students.
"Lower-income students increasingly have had to rely on loans because need-based grant aid has not kept pace with college costs," said the Project on Student Debt, a nonprofit organization working to make higher education more available and affordable for people of all backgrounds.
Under the new law, the annual limit on federal Pell grants will rise from the current level of $4,310 to $5,400 in 2012.
Tuition and fees at four-year public colleges averaged $5,836 in 2006-2007, up 6.3 percent from the previous year, according to the College Board.
The new law also expands eligibility for the Pell Grant.
Interest rate cut. The law phases in a reduced interest rate on new subsidized federal Stafford loans to undergraduate students. The rate will be reduced from the current 6.8 percent to 6.0 percent starting in July, 5.6 percent in July 2009, 4.5 percent in July 2010 and 3.4 percent starting July 2011. In July 2012, it will revert to 6.8 percent unless Congress acts.
Be the first to comment on this story