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On June 29, 2012, Congress approved legislation to stop the interest rate on federal subsidized Stafford Loans from increasing from the current 3.4% to 6.8% on July 1, 2012, for new college borrowers. The rate had been scheduled to increase under provisions in the College Cost Reduction and Access Act of 2007. The rate freeze is effective for one year – and will (unless extended) increase to 6.8% on July 1, 2013.
Under the new legislation:
- Rates on subsidized Stafford Loans will remain at 3.4% for undergraduates for one more school year, until July 1, 2013.
- As of July 1, 2013, undergraduate students with a subsidized Stafford Loan will have a maximum of six year of in-school status when the federal government will pay the interest on the loan while the student is in school. Previously, the government paid the interest for as long as it took a student to get a diploma.
Sterling Raskie, MSFS, CFP®, ChFC®
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