A recent article in Business Week does a great job in explaining the many changes to the Federal student loan program that went into effect on July 1st. I recommend that you read the entire article, but here are the highlights:
- The new legislation has removed the “middlemen” of private lenders from the student loan program, making the process of applying easier and more transparent.
- PLUS loans that parents could apply for (over and above the subsidized loans for students) will now be a bit easier to obtain at a lower interest rate than before.
- Students will be able to consolidate all their student loans to make payments easier and perhaps save some money (but research your own situation carefully before you leap to consolidate, as there are some drawbacks, too).
- More students will be eligible for Pell Grants than before, and each grant will be higher than in the past.
- The Income Based Repayment program has been improved, making it easier for low-income graduates to make lower payments over time.
It’s important that students and parents learn about these changes as they plan their college tuition budgets for the future.