As President Barack Obama affixed his “John Hancock” on a recent student loan reform bill, interest rates on these loans will become lower retroactive to July 1, as control of the student loan space will officially shift from the U.S. government’s movers and shakers to those of financial institutions.
As President Barack Obama affixed his “John Hancock” on a recent student loan reform bill, interest rates on these loans will become lower retroactive to July 1, as control of the student loan space will officially shift from the U.S. government’s movers and shakers to those of financial institutions. On Friday, the President signed the bipartisan student loan interest rate bill, which would result in the U.S. government retroactively reducing rates on loans made after July 1, 2013.
Although, rates will be more affordable than the subsidized undergraduate rate of 6.8 percent in the interim, the reforms also include some form of protection for students and parents, in defense against significant spikes in market rates.
In all, some 11 million students will benefit from the lower interest rates on new student loans taken out after the first of July. The reforms should be fully implemented in just a few days, right on time for the start of the 2013-14 academic year in the U.S.’ colleges and universities.
Out of these borrowers, about 8.8 million will have their rates move down from 6.8 percent to 3.86 percent, another 1.5 million Graduate Unsubsidized borrowers will enjoy rates reduced from 6.8 percent to 5.41 percent, and over 1 million Grad PLUS and Parent PLUS borrowers will get their first reduction in several years – from 7.9 percent to 6.41 percent.
Going forward, the Obama Administration will resume working closely with Democrat and Republican policy makers, as the U.S. government “(forges) ahead on the important work of putting higher education in reach for every American,” said Domestic Policy Council director Cecilia Munoz in a statement following the President signing the new student loan bill.