Reusable Materials 34: Questions About Changes in Student Loans

Thursdays we discuss how reusable materials help you WOW committees and save time

Becky enrolled in a private for-profit college in her community. She wanted to get a certificate as a medical assistant. The school would not tell her the total cost of the program. They only listed how much she would pay per credit hour. They claimed that you could total the amount of money you would have to pay, by multiplying the hours required per program by the cost per hour. They offered a free computer if she signed the contract. They also offered to help her get financial aid to attend. They helped Becky get a Pell grant and take out $9,000 in student loans.

Q: What is the current status on interest for student loans?

A: On August 8, 2013 President Obama signed a bill setting interest rates for federal student loans. Prior to this bill, Congress set the interest rates for student loans. The Bipartisan Student Loan Certainty Act of 2013 changed how rates will be determined.  The new bill is tied to market-based rates and changes each year.

The confusion arises from back-and-forth changes in student loan rates during the months of June through August. One year ago, Congress set a deadline for student loans rates to double for undergraduates on July 1, 2013. During the last week of June 2013, Congress delayed a vote on a proposal to delay the interest hike. As a result, the rates doubled on July 1. Public uproar drove the House of Representatives to pass lowering the rates.

Q: Will interest rates on loans increase after I get the loan?

A: The rate remains fixed once the loan is issued. It will not increase after you receive the loan. Of course, if your student takes out a new loan each year, the rates on each loan will differ.

We encourage you to manage how your loan funds carefully to borrow the least amount of money possible. Avoid extravagances!

Saturday we share a tip about using scholarship books in a digital world

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