<p>The interest rates were not recently raised. The existing rates and timetable for them were set by the college cost and reduction act back in 2007. The act had the sub rate loans gradually decreasing from 6.8% each year starting in the 2008-2009 school year until hitting this years low of 3.4% (6.8, 6.0, 5.6, 4.5, 3.4 - my daughter has 4 of those rates). The sub rates were *always *scheduled to revert back to 6.8% for the 2012-2013 school year. Given current interest rates, it seems ludicrous that they would stay at that level.</p>
<p>^^ I don’t know, but perhaps the profits are going towards Pell grants too. I do see it as a hidden tax . 6.8% in this economy is just too high.</p>
<p>I believe that the 6.8% rate kicks in for next year’s loans (2012-2013). I believe the rates in recent years were:</p>
<p>6.0% (2008-09), 5.6% (2009-10), 4.5% (2010-11) and 3.4% (2011-12).</p>
<p>Cross posted with swimcatsmom.</p>
<p>Like I said, it depends on how you want to look at it. The federal budget is not on automatic pilot. Congress has to approve a budget each and every year. </p>
<p>Congress could have kept the rates at the then lower rates, but chose not to. They voted (with the approval with the White House) to approve the new, higher rates in the budget that they passed. The President signed it.</p>
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<p>That is why I see this as hidden tax on the backs of those who qualify for Sub Staffords.</p>
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The signed budget is for the current 2011-2012 school year that has subsidized loans at the lower 3.4% interest rates. As far as I am aware, there is not a signed budget for the 2012-2013 school year yet. That is the one they are working on now. It would be the earliest ever if there is - usually it is about jan/feb before they pass it. Often later. The Pell amounts are not usually finalized until well after schools have started making tentative aid awards, so they often have to go back in and adjust them.</p>
<p>As others have noted, the interest rates have been set for several years. Financial aid is governed by Congressional action.</p>
<p>There would be no money realized in the coming year if the sub grace period is removed only for new loans. That would mean only loans made beginning in July 2012 would be affected … it would be impossible to change the terms for only some of the loans in the 2011-12 academic year. There would have to be rules for those loans already signed/disbursed & then new rules on loans signed after a certain date … and then any prom notes signed for loans not yet disbursed would have to be identified & new prom notes secured before disbursing. And would the second disbursement on a loan disbursed prior to the change be held up until a new prom note was signed to govern that half of the disbursement? Knowing how regs work in finaid, that won’t happen. However, regs ARE often retroactive, meaning they could apply to anything July 1, 2011 & after. But that would mean changing the sub grace period terms after the fact … which as pointed out, seems against the terms of the signed prom note. So either they will or won’t do it, and if they won’t, there will be no money from it this year. If they do, they could obviously then change the terms on all sub loans.</p>
<p>I don’t know what the fine print says on the prom note or in the regs as it relates to no interest during the grace period. There may be some loophole that allows the change.</p>
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<p>Isn’t the Perkins Loan gone very soon, or already gone? If that is the case, perhaps that money can be used toward Pell Grants.</p>
<p>New Perkins money has been dwindling over the years & is minimal now. For the most part, Perkins is a revolving fund … as a school collects on Perkins loans (yes, the school actually collects Perkins money), the money collected is used to fund new loans.</p>
<p>I knew that it was a revolving fund, but I thought that since it is no longer offered that those funds would need to go back to the government as they are collected.</p>
<p>Perkins loans are still being offered, at least for the 10/11 year. I think the ax is likely to fall on them very soon though!</p>