To relieve financial burdens on college students, the U.S. Department of Education recently reduced interest rates on some student loans.
Interest loans taken out since 1998 dropped from 4.06 percent to 3.42 percent, according to a Department of Education press release. The reduction will bring the student loan interest rate to an all-time low. The rate for students still in college will be even lower at 2.82 percent.
“Record low loan interest rates may make the difference for many students considering whether to pursue postsecondary education,” said Department of Education Secretary Rod Paige in a written statement.
Nicole Bowen, an education graduate assistant, said she took a loan out for herself and her husband to go back to school this fall. Bowen said she was happy to see the decrease in loan rates.
“We also have loans from undergraduate that we will be paying back,” Bowen said. “It is good to know that the interest rates will be low for those loans so we will not be paying them back for the rest of our lives.”
Students who borrowed $10,000 in loans under a 10-year standard repayment plan will save $362 in interest over the life of the loan because of the new reduction, according to the press release.
Jan Elliott, a student loan officer with Campus Federal Credit Union, said the rate reduction is good for students but will not increase the number of loans taken out.
“If you need a loan, you will take one out regardless,” Elliott said. “No matter what the rate is.” Elliott said the best part of federal loans for students is the payback schedule.
“For one thing, you do not have to start paying the loan back until six months after you graduate or drop below halftime [school status],” Elliott said. “Also, now there are different options for repayment beside the 10 year standard repayment schedule.”
Elliott said additional options allow students to start making smaller payments and increase the payment amount as their income increases.
Elliott said students currently requesting loans are lucky.
“There will always be a need for loans and right now they are at there all time low,” Elliott said.