Current Loan News
Important Announcement for Graduate & Law Students Effective July 1, 2012
President Obama recently signed into law the Budget Control Act of 2011.
This action eliminates the in-school loan interest subsidy for graduate and professional students. Federal Direct Subsidized Stafford loans will no longer exist as of July 1, 2012. All Stafford loans from that date forward will be Federal Direct Unsubsidized. The interest will begin accruing upon disbursement of the loan proceeds. This does not impact the loan limits or the interest rate.
Direct Subsidized Stafford Loan Grace Period for 2012-2014
Students borrowing a Subsidized Direct Stafford Loan between 7/1/12 and 7/1/14 (a two year period) should be aware that for this two year period the interest on these loans, though in all prior years was paid by the U.S. Department of Education, will not be paid during the six month grace period provided to students when they are no longer enrolled on at least a half time basis. Like the Unsubsidized Direct Stafford Loan the interest will accrue during grace periods. During deferment periods the interest on Subsidized Direct Stafford loans will still be paid by the U.S. Department of Education.
The Fixed interest rate for Subsidized Direct Loans disbursed on or after 7/1/2012 will be 3.4%. Note: This is a decrease from 6.8% as a result of the recent legislative changes and only applies to the 2012-2013 school year. The Fixed interest rate for Unsubsidized Loans disbursed on or after 7/1/2012 is 6.8%. Any Direct Plus Loan disbursed on or after 7/1/12 will have a fixed interest rate of 7.9%.
Effective for loans first disbursed on or after July 1, 2012, the law eliminates the authority of the Department to offer any repayment incentives to Direct Loan borrowers to encourage on-time repayment of loans, including any reduction in the interest rate or origination fee. As a result, the up-front interest rebate that has been provided to Direct Loan borrowers at the time of loan disbursement will not be offered on any Direct Loan with a first disbursement date that is on or after July 1, 2012.