Kildee Announces July 1st Drop in Student Loan Interest Rates

“Access to higher education is becoming more difficult for Michigan families as the prices of not only college, but also other critical expenses such as groceries and gas are on the rise.” said Kildee. “Interest rate reductions will open doors to those for whom the cost of college would otherwise be prohibitive. As the rates continue to drop, the hope of a college education will become a reality for the children of more middle class and low-income families. ”

Rates on federally subsidized Stafford Loans will continue to drop over the next few years:

·        to 5.6% for loans disbursed between July 1, 2009 and June 30, 2010;

·        to 4.5% for loans disbursed between July 1, 2010 and June 30, 2011; and

·        to 3.4% for loans disbursed between July 1, 2011 and June 30, 2012.

To reduce the cost of loans for hundreds of thousands of Michigan students, the legislation cuts in half the interest rates on need-based student loans, from 6.8 percent in 2007 to 3.4 percent by 2011. Once fully phased-in, this will save the typical Michigan student borrower – with $13,256 in need-based student loan debt – $4,240 over the life of the loan. About 6.8 million students take out need-based loans every year.

The College Cost Reduction and Access Act of 2007, cosponsored by Rep. Kildee, will also:

·        Increase the Pell Grant Scholarship by $490 (to a maximum award of $4,731) in the 2008-2009 academic year;

·        Provide up-front tuition assistance of $4,000 each year for students who commit to teaching high-need subjects in low-income schools upon graduation; and

·        Encourage and reward public service by providing loan forgiveness after 10 years for public servants, including military service members, first responders, law enforcement, firefighters, nurses, public defenders, early childhood educators, librarians, and others.

The College Cost Reduction and Access Act of 2007 was signed into law on September 27, 2007, and will boost college financial aid by more than $20 billion over five years.