With the signing of the Student Loan Certainty Act of 2013, President Obama retroactively lowered the interest rates paid on students loans. Without congressional action, interest rates on these loans would have increased from 3.4 percent to 6.8 percent.
Under the new law, interest rates for undergraduate students is 3.86 percent, while rates for graduate student loans is 5.41 percent. The rates for PLUS loans, which parents of students and graduate students take out, is 6.41 percent.
The rates are tied to financial markets, which means lower rates for this school year. The law is expected to help the millions of students and their parents who take out student loans by saving them hundreds of dollars in interest over the duration of the loan. However, while today’s students will reap the benefits of the lowered rates, students in later years may have to pay higher rates as the economy improves in the years to come.
Although many student loan advisors welcomed the lowered rates, they also see a potential problem for future students seeking an education. Experts agree that this short-term fix does not address the true problem: the rising cost of a higher education.
In future blogs, we will address these important issues. In the meantime, please visit our website at www.futurebuck.com to get more information on student loans and other financial, credit and debt management topics.