|
The rate change is automatic and effective through June 30, 2006. Stafford loan rates while in-school, grace or deferment increases from 2.77% to 4.70% while PLUS rates increase from 4.17% to 6.10%. Stafford loan rates for students in repayment or forbearance rise from 3.37% to 5.30%. Stafford consolidation loan repayment rates during grace and deferment periods increases from 2.875% to 4.750%*. Stafford consolidation loan repayment rates during repayment periods increases from 3.375% to 5.375%*. Parent PLUS consolidation loans raise from 4.25% to 6.125%.
| Federal Stafford Loan Rates - July 1, 2005 through June 30, 2006 |
| During school, grace and deferment periods |
4.7% |
| During active repayment, including forbearance periods |
5.3% |
| Federal Parent PLUS Rate |
| For all periods during repayment, including forbearance and deferment |
6.1% |
| Federal Consolidation Loans* |
| Stafford - grace and deferment periods |
4.75% |
| Stafford - repayment |
5.375% |
| Parent PLUS |
6.125% |
*The rate for a consolidation loan is the weighted-average rate of the loans being consolidated, adjusted up to the nearest one-eighth of a percentage point, not to exceed 8.25%. Borrowers considering loan consolidation should research their options and seek advice before moving forward. Consolidation rates may be higher for some borrowers based on the type(s) of federal loans included in the consolidation.
*For loans issued after July 1, 1998, Stafford loans are capped at 8.25%, and parent PLUS loans may not exceed 9.00%.
Interest rates on federal education loans are set by Congress and vary annually based on a formula related to short-term Treasury securities. For the 2004/2005 school year, student loan rates had reached historic lows. Effective July 1st, 2005, interest rates for federal student loans increased by nearly 2 percentage points, the first in five years and the largest one-year rise in the 40-year history of the federal loan program. This is actually good news for borrowers. Although higher, the rates for 2005/2006 are relatively low and means that many student loan borrowers, graduates and students still in school may consolidate their government-guaranteed loans and still save thousands of dollars by locking in remaining low rates before any further predicted rate increases.
|
