Three quarters of the current Stafford borrowers took a combination of subsidized and unsubsidized student loans. Only 17 percent took only subsidized loans, with the lower interest rates.
"It's the whole middle class," said Tara Payne, vice president of the NHHEAF Network's Center for College Planning. "It's definitely helping middle class families It positively impacts many more people." .
"Now that it's going to be 6.4 percent, that may make a difference for families, who might prefer to go with a federal loan with a lot of protections in place, knowing that that rate will be fixed," Payne said. "It really helps middle class families who want to send their kids to college but need to finance it."
upon by the Senate, allowing undergraduates to borrow at a 3.9 interest rate for subsidized and unsubsidized loans this fall. Graduate students would have access to loans at 5.4 percent, and parents would borrow at 6.4 percent.
Until July 1, borrowers of subsidized students loans faced interest rates of 3.4 percent, only slightly lower than they'll see under the loan compromise approved this week.
Much of the outrage over the interest rate doubling on federally subsidized Stafford loans this summer was due to the measure coming on the backs of the nation's neediest students. That's why it's a surprise to some that a new compromise will ease not only those students' burdens but also those Omega Seamaster 600m Price of many middle class families.
By lowering interest rates for all borrowers, Payne said, at least in the short term, the loan compromise will help make borrowing easier for significantly more Americans.
But this week, the House approved a measure already agreed Omega Brown Leather Watch
Rates on new subsidized Stafford loans doubled to 6.8 percent July 1 because Congress could not agree on a new way to keep them at 3.4 percent.
Payne said the measure is significant because it helps all borrowers, not only those impacted by the doubled interest rate, at least in the near future.
"It's the whole middle class," said Tara Payne, vice president of the NHHEAF Network's Center for College Planning. "It's definitely helping middle class families It positively impacts many more people."
When it comes to the way the NHHEAF Network and other loan agencies advise their borrowers, Payne said, the Congressional measure will have the largest impact on parent borrowers of PLUS loans.
But the measure, which still needs the signature of President Barack Obama, would cap interest rates at 8.25 for undergraduates, 9.5 percent for graduate students and 10.5 percent for parents.
The rates will be locked in for the life of the loan, but each year's new loan could be more expensive, since interest rates will be tied to the government's own cost of borrowing.
Much of the outrage over the interest rate doubling on federally subsidized Stafford loans this summer was due to the measure coming on the backs of the nation's neediest students. That's why it's a surprise to some that a new compromise will ease not only those students' burdens but also Omega Speedmaster Professional Wrist
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those of many middle class families.
The most popular federal loan for students, unsubsidized student loans, already were being borrowed at a 6.8 percent interest rate.
As the economy improves and it becomes more expensive for the government to borrow money, interest rates will rise.
class families benefit from student loan deal
The compromise has its critics. Sen. Elizabeth Warren, D Mass., had been pushing for her own interest rate fix, which would have allowed students to borrow at the same low interest rates as banks.
The College Board showed that the percentage of students taking federal Stafford loans increased from 23 percent in the 2001 02 school year to 35 percent in 2011 12.
The Congressional Budget Office has estimated that rates would not reach those limits in the next 10 years.
Before the student loan compromise, parents were expecting to borrow PLUS loans at rates of 7.49 percent. That rate caused many to look elsewhere, finding private loans with lower rates but fewer protections, or borrowing on their home equity.
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