West Virginia University students, along with borrowers nationwide, are getting an interest rate break in their federally backed student loans.
On July 1, the interest rate dropped from 8.19 percent to 5.99 percent for loans disbursed on or after July 1, 1998.
Borrowers whose loans were disbursed before July 1, 1998, also can take advantage of the reduced rates by consolidating their loans, said Ken Sears, WVU associate director of financial aid.
Sears said there is a major incentive to consolidate loans before Sept. 30, 2001.”Weve learned that loans consolidated between July 1, 2001 and Sept. 30, 2001 will also receive an additional .80 percent reduction in the interest rate, and another .25 percent will be deducted if the loan is paid electronically,”he said.
Therefore, if borrowers choose to do both, they will see their interest rates drop to 4.9 percent for loans made after 1998 and to 5.74 percent for loans made before 1998.
“Thats pretty remarkable since I can recall interest rates in some of the student loan programs during the late 1970s as high as 17 or 18 percent,”he said.
For information on consolidating loans, call the Direct Loan Consolidation Center at 800-557-7392 or visit the Loan Consolidation Web site atwww.loanconsolidation.ed.gov.
The National Association of Student Financial Aid Administrators estimates that the new interest rates can save borrowers under a standard 10-year repayment plan approximately $136 for every $1,000 of outstanding loans.
The interest rates also dropped for PLUS loans taken by parents to finance a childs education. The PLUS interest rate is now 6.79 percent, down from 8.99 percent.
WVU is one of nearly 8,000 colleges, universities and training schools eligible to participate in the federal loan program and lends over $75 million each year to over 12,000 students in the Direct Loan program. On an historical note, Sears added that WVU was the first lender in this national program.
Seventy percent of WVU students receive some form of financial aid from federal, state, private and WVU funds. The WVU Financial Aid office administers over $120 million annually in all programs, which include grants, scholarships, loans and employment.