U.S. Increases Federal Student Loans Rates.
Many students are attracted to Federal Student Loans to finance their education because of the low rates the loans carry. There is no doubt that federal student loans have helped thousands of US citizens to pave their ways through university. If not for the loans, some of the professionals we have in the country today would have ended up school dropouts. However, the federal student loans are not without their cons. A lot of money which would have been used for other developmental programme is tied down to the scheme as the total student loans in the United States of America is now over $1,4 trillion. This figure is huge. Another problem facing the scheme is the issue of repayment
Federal Student Loans New Rates
Starting from 01 July 2017, any college student that wants to borrow Federal Student Loans should prepare to pay as high as 4.45 per cent. This represents an increase of over 18 per cent from the present rate of 3.76 per cent. The implication is that a college student will be paying 18 per cent interest rates than what is currently obtainable.
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On the other hand, graduate students should prepare to pay higher financing costs with effect from 01 July 2017. The rate for a direct unsubsidized loan has been increased from 5.31 per cent to 6 per cent. This is approximately 13 per cent increase on the current rate. The interest will start accruing the moment the borrower draws on the loan.
Furthermore, the new rate on direct plus loans for parents and graduate students is now 7 per cent against 6.31 per cent. This represents approximately 10 per cent increase. All the new rates only apply to Federal Student Loans. Nevertheless, the new rates will not affect existing federal students loans taken out in the last ten years.
With times, we shall see what effects this may have on the repayment of the loans. For now, what is sure is that the new rates will increase the financial burden of college students and undergraduates who might depend of Federal Student Loans to finance their education.