The Wall Street Journal writes today about the new rules for student loans.
Some parents and students may also see lower interest rates on new loans. Now that all Parent PLUS loans are under the Direct Loan Program, the fixed rate for new Parent PLUS loans is 7.9%. Some lenders had charged 8.5%.
And the fixed rate has dropped, to 4.5% from 5.6%, for new subsidized Stafford loans for undergraduates. With subsidized loans, the federal government pays the interest on a loan while the student is in school, during the grace period after graduation or if the loan is in deferment, which is when borrowers are temporarily allowed to stop making payments.
The Department of Education also has increased the maximum Federal Pell Grant award to $5,550 for the 2010-2011 academic year, from $5,350 for the 2009-2010 school year.
As Investopedia pointed out, the reforms eliminate the middleman, enlarge Pell Grants, increase funding for minority-serving institutions, lower income-based payments, and offer more forgiveness opportunities.
Learn more about how reforms to federal student loans help students, families and taxpayers.
