For prior Stafford and PLUS Loans with variable interest rates that are subject to change each July 1, the U.S. Department of Education has announced the rates that apply from July 1, 2007 through June 30, 2008. The rates will rise slightly. The fixed rates of 6.8 percent for Staffords and 8.5 percent for PLUS Loans that went into effect last July are not subject to change.
For Stafford Loans originated between July 1, 1998 and June 30, 2006, the variable interest rate is 6.62 percent during in-school, grace and deferment periods. During repayment (including forbearance), the rate is 7.22 percent. The rates were 6.54 percent and 7.14 percent, respectively, for the prior year.
PLUS Loans originated during the same time frame will have a variable rate of 8.02 percent, a change from 7.94 percent.
These variable rates are based upon the bond equivalent rate of 91-day Treasury Bills auctioned at the final auction held before June 1 of each year. Older variable rate loans also have slight increases.
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New Stafford Loan Limits Going into Effect
Annual loan limits were increased for Federal Stafford loans for several grade levels under the Higher Education Reconciliation Act (HERA), with an effective date of July 1, 2007. If you have been confused about what kind of effective date, or “trigger” as it is often called, you are not alone.
Originally, guidance provided by the U.S. Department of Education in a Dear Colleague Letter (March 2006) said the increases would go into effect for loans certified on or after July 1, 2007. The certification requirement was subsequently overridden by new regulations published in August, which changed the trigger to loans disbursed on or after that date. Then in a final clarification made during the Federal Student Aid Conferences, ED indicated the effective date is for loans first disbursed on or after July 1.
What this means is that schools may certify loans now with the higher limits as long as the first disbursement is scheduled on or after July 1, 2007. The loan period must either begin on or after July 1 or, for crossover periods, include July 1 (e.g., for summer terms that begin in June and end in August). For fall-spring loans, certifying loans at the higher limit is business as usual since the first disbursement will be after the effective date. For summer loans and other crossover loan periods, the school may use any of the following options to obtain the higher limit for the student:
- Wait until July 1 to certify the loan
- Certify the loan now and schedule the first disbursement on or after July 1
- Certify two loans – one at the current, lower limit with the first disbursement before July, and a second loan for the difference with the first disbursement scheduled on or after July 1.
Stafford Annual Loan Limits
Effective for loans first disbursed on or after July 1, 2007
New limits are in italics.
|
Base Sub/Unsub |
Additional Unsub |
| 1st year undergraduate |
$3,500 |
$4,000 |
| 2nd year undergraduate |
$4,500 |
$4,000 |
| 3rd year & beyond undergraduate |
$5,500 |
$5,000 |
| Graduate/professional |
$8,500 |
$12,000 |
| Preparatory coursework (for enrollment in an undergraduate program) |
$2,625 |
$4,000 |
| Preparatory coursework (for enrollment in a graduate or professional program) |
$5,500 |
$7,000 |
| Teacher certification |
$5,500 |
$7,000 |
|
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Updated 6/18/07
