On Sunday, July 1, several changes to federal student loan programs took effect. If youâ€™re a current or soon-to-be college or graduate student, read on to see if you’ll be affected.
For undergraduate students:
The interest rate on subsidized Stafford loans taken out as of July 1, 2012, will remain at 3.4 % for one more year. But under a temporary provision that lasts until July 1, 2014, holders of subsidized Stafford loans taken this year and next will no longer enjoy an interest-free grace period after graduation. For the next two years, students with subsidized Stafford loans still won’t have to enter repayment until six months after they graduate, but interest will accrue during that time period.
In your last year of school, talk to your financial aid office about government options for students with federal loans, including Income-Based Repayment and Public Service Loan Forgiveness, Abernathy recommends.
Separately, students without a high school diploma or GED (excluding home schooled students) who are enrolling in college for the first time are no longer eligible for federal student aid, including loans. Such students that have already completed some college will still be eligible for federal aid.
For graduate students:
Graduate students are no longer eligible for government-subsidized Stafford loans. Grad students can still take out unsubsidized Stafford loans, for which interest accrues at a rate of 6.8 percent during school.
Graduate students with federal loans will be eligible for the government loan repayment programs after graduation, including Income-Based Repayment and Public Service Loan Forgiveness, as well as unemployment deferment.