Released: October 19, 2007

New loan rules don’t benefit all students

Source: Matthew Mogul, The Kiplinger Letter

A new law will help a lot of struggling students and parents - but others will be very disappointed.

The good news is very good: If you’re an undergraduate and eligible for subsidized loans, the rates will be a lot lower. Congress passed a law cutting them in half, from 6.8% to 3.4%, over the next five years. The lower rate affects Stafford loans for students who qualify for federal subsidies, meaning Uncle Sam pays the interest on the loans while you’re still in school. Plus limits on Pell Grants for low-income students will gradually rise from $4,800 in 2008 to $5,400 in 2012.

The bad news is that many other students won’t get help and may even end up paying more. That includes undergraduates with unsubsidized federally backed loans, graduate students and graduates who may want to refinance their loans.

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