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Home » Student Finances

Student Loan Rate Cut Opportunities

Last updated by on December 31, 2013

Whether you’ve graduated recently or you’re thinking about going back to school, there are some appealing rate cuts that you could take advantage of. This is potentially a great opportunity to strategically slice your interest rates, with a little homework.

Student Loan Rate Cuts on Those Going Back to School (or Beginning)

Recently, subsidized Stafford loan rates were cut from 6 to 5.6%. And it’s going to get a lot better. Here’s how the rates shake out over the next few years:

  • July 1, 2009 – June 30, 2010 = 5.6%
  • July 1, 2010 – June 30, 2011 = 4.5%
  • July 1, 2011 – June 30, 2012 = 3.4%

student loan ratesKeep in mind that these are the subsidized versions of Stafford loans, meaning that you have proven you need the loan assistance. If unsubsidized, Stafford loans remain steady at 6.8%, which is what the subsidized versions will return to in mid – 2012. To find out if you’re eligible for a Stafford loan, check out the resources at the end of the post. If you’re thinking of going back to school at some point, but not quite sure when, it might be worth taking the upcoming rate cuts into consideration.

Rate Cuts for those who have Already Taken Out Loans

If you had taken out federal loans before July 1, 2006, the repayment interest rate on those loans has recently dropped from 4.21% to 2.48%. If you consolidate, you can lock in a rate of 2.5% for the life of the loan. If you are in your six month post-grad grace period, you can lock in a rate of 2%.

If you have Federal PLUS loans, rate have dropped from 5.01% to 3.38%. PLUS loan borrowers who consolidate can lock in a rate of 3.38%. Whether you’ve taken out federal loans or PLUS, there don’t seem to be many downsides in locking in a low rate now.

Want to Get a Subsidized Stafford Loan?

The first step is to apply on the official U.S. government FAFSA site (Free Application for Federal Student Aid)

You can also find out more about Stafford loans at the:

U.S. Department of Education Stafford loan site

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  • rkane says:

    Good article, informative. Just to be clear, these rates represent undergrad Stafford loans, as opposed to graduate subsidized Staffords, correct?

  • Dan says:

    You mention all these 2% rates etc…for the consolidation of stafford loans…how do you go about consolidating and what are the requirements and limitations to get those rates. It sounds like an amazing opportunity but I cant find out how to start the process and suggestion or further knowledge?

  • jimmy says:

    I agree, this sounds terrific, but i have to echo dan here and say how the heck do i get started??

  • kathy says:

    Is this for undergradute only?

  • Student Loan Without Cosigner says:

    By cutting down the interest rate on the Stafford Loans, I think that it is a breather of relief for many students who are wiling to take students loans but cannot afford it due to exorbitant amount of interest charged.

    In addition to this,I think that if the private loan agencies also curtail down their interest rate, then it would really be an icing on the cake for the students.


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