Summary of New Rules for Student Loans

Release date: March 17, 2006 |

Stafford Loans

• Rates will jump on July 1 and go from a floating to a fixed rate.

• Students will lose the option of consolidating while they are still in school.

• Some experts advise students to consolidate now to lock in lower rates, while others are advising students to wait until closer to the July 1 deadline.

• As of July 1, 2007, students will also be allowed to borrow more Stafford funds during their first two years. Freshmen will be able to borrow $3,500 (compared to $2,625), while sophomores will be able to borrow $4,500, up from $3,500.

PLUS Loans

• As of July 1, the rates for PLUS loans will increase from 6.1 percent to 8.5 percent.

• If the college or university uses the direct loan system, parents will see their PLUS loan rates go from 6.1 percent to 7.9 percent. This could be adjusted to 8.5 percent in the future.