July 7, 2011: Interest Rates on Subsidized Student Loans Have Been Cut in Half PDF Print E-mail

Dear Friends,

Starting July 1st, the interest rate on subsidized student loans was cut to 3.4% -- the last of four steps to cut this interest rate in half over four years, under the 2007 College Cost Reduction and Access Act enacted by a Democratic-led Congress.  Thanks to these cuts, the typical student borrower who started college in 2008 will have saved $2,570 over the life of their loan. 

Under the College Cost Reduction and Access Act, the interest rate on subsidized student loans has been cut as follows:

  • On July 1, 2008, the interest rate was cut from 6.8% to 6.0%;
  • On July 1, 2009, the interest rate was cut from 6.0% to 5.6%;
  • On July 1, 2010, the interest rate was cut from 5.6% to 4.5%; and
  • On July 1, 2011, the interest rate was cut from 4.5% to 3.4%.

The cutting of the interest rate on these subsidized student loans in half was enacted as part of the Democratic-led Congress’s agenda to make college more affordable and accessible for millions of American students.  I truly believe that making college more affordable is one of the most important things we can do to invest in our nation’s future and build a stronger middle class.

Also starting this week, due to provisions in the 2008 Higher Education Opportunity Act, new college affordability information became available to young people and their families on the Department of Education website.  This information will help prospective college students and their families shop for the best value, based on their individual circumstances, for a college education.  This new information will provide students and their families early estimates of their expected college costs, and allow them to estimate the annual and total cost of a college education at the individual colleges or universities they are interested in.  Also available will be information on incentives for attendance, such as need-based aid, that individual colleges and universities may be offering.

To learn more, visit the Department of Education’s website

Sincerely,

Charles Gonzalez
Member of Congress