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July 1 Brings Higher Rates, Other Changes for New Federal Student Loans

Interest rates and fees rise, subsidized loans won’t accrue interest during grace period

Oakland, CA – July 1 is when most changes to federal student aid go into effect for the coming school year.  Several are lined up for 2014-15, including higher interest rates on new student loans for undergraduates, graduate students, and parents. The Institute on College Access & Success’ (TICAS) Project on Student Debt has created a new easy-to-read chart with interest rates, loan amounts, and other useful information about federal loans issued in 2014-15.

In 2013, Congress changed the interest-rate rules for federal student loans. Rates for new loans are now set each year based on the 10-year U.S. Treasury note rate in the spring of that year plus a fixed percentage that varies based on the loan type. Those rates are then fixed for the life of the loans.

“Federal student loans are still the safest way to borrow for college, with fixed rates, flexible repayment options like income-based repayment, and consumer protections like discharges when schools close,” said Lauren Asher, TICAS president. “But with interest rates on the rise, federal loans are expected to cost students and families more over time than if Congress had simply left them alone last year. Without clear information about the benefits of federal loans, news of rising rates may lead more borrowers to take on much riskier private loans instead.”

The rates for new loans this year are lower than if Congress had let the old rules stand, but beginning next July, the rates on some loans are expected to be higher than under prior law.  According to Congressional Budget Office (CBO) projections, rates for new loans will rise substantially over the next decade and generate $127 billion in government profits at borrowers’ expense.  Under prior law, interest rates would have consistently been 6.8% for all Stafford loans and 7.9% for PLUS loans. Under currentlaw, CBO projects rates for undergraduates to exceed 6.8% by 2017, and rates for graduate students and parents to top their old levels in 2015, just one year from now.

The changes coming on July 1 also include some good news for students and families:

  • For new subsidized loans, interest won’t accrue during the six-month grace period before the first payment is due.  (This benefit was temporarily eliminated for subsidized loans issued in 2012-13 and 2013-14.)
  • The maximum Pell Grant will increase by $85 to $5,730 (up from $5,645), financed by savings from cutting costly middlemen out of the student loan process back in 2010. However, even with this increase, the maximum Pell Grant will cover less than a third of what it costs to attend a four-year public college, the smallest share since the program began.

And here’s how the higher loan costs break down for federal student loans issued in 2014-15:

  • Fixed interest rates
    • Stafford loans for undergraduates: 4.66% (up from 3.86% for loans issued in 2013-14).
    • Stafford loans for graduate students: 6.21% (up from 5.41% for loans issued in 2013-14).
    • Parent and Graduate PLUS loans: 7.21% (up from 6.41% for loans issued in 2013-14).
  •  Origination fees
    • Because of budget sequestration enacted by Congress in 2011, origination fees will rise for federal Direct loans disbursed on or after October 1, 2014. For Stafford loans the fee will be 1.073% of the loan principal (up from 1.072%); for PLUS loans it will be 4.292% (up from 4.288%).

TICAS’ 2013 white paper includes detailed recommendations to keep federal student loans affordable, streamline the loan program, and better target benefits, as well as broader reforms to increase college affordability and completion.

For more information on new student loan terms, please see our summary of Federal Student Loan Terms for 2014-15.

Assemblymember Cheryl R. Brown Honors Men of Distinction

Men of Distinction

SAN BERNARDINO, CA- Assemblymember Cheryl R. Brown (D-San Bernardino) honored outstanding men from the 47th Assembly District at her annual Men of Distinction program on Friday, June 20, at the Grand Terrace Community Center. The recognition event was attended by the honorees and their family members and included special appearances from Mayor Carey Davis, Mayor Pro Tem Virginia Marquez and Councilman Rikke Van Johnson, City of San Bernardino; Mayor Pro Tem Edward Palmer, City of Rialto; City Treasurer Janet Koehler-Brooks, City of Fontana; and Trustee Joseph Williams, San Bernardino Community College District.

The 2014 honorees included: Trustee Randall Ceniceros, Colton Joint Unified School District; Carlos Teran, a longtime community advocate; Alan Dyer, a member of the Board of Directors at the West Valley Water District; Richard Loder, a community volunteer and youth advocate;  Ratibu Jacocks, a consultant and executive board member of the Westside Action Group (WAG); Danny Marquez, founder of Veterans Partnering with Communities, Inc., Kermit Moss, a small business owner; and Matthew Slowik, a planning commissioner for the City of Fontana.

For more information, contact Ashley Jones at (909) 381-3238. 

“What’s done… IS DONE!”

Lou Coleman

Lou Coleman

By Lou Coleman

For many of you, this might be one of the hardest truths to accept…..there is absolutely no hope of going and changing the past. “What’s done is done!” Your future is suffering because you can’t seem to forgive yourself for what you’ve already done. As sorry as we are for the things that we have done, we cannot go back in time and undo them. And what good is it anyway to sit and beat yourself up over the things that you’ve done? If you are really sorry, then pick yourself up and do something different with your life. Stop worrying about things that you cannot change, and do what you can to change the things that are still within your power to do something about, because “What’s done is Done!”

In Luke 9:62 we find a story that vividly illustrates the danger of looking back. God has just pronounced judgment on Sodom and Gomorrah and they are about to be destroyed. In the meantime, God sends a message to Lot and his family. “Flee for your life; do not look back, or stop anywhere in the valley; flee to the hills, lest you be consumed.” Lot and his wife, and their two daughters left behind their home as fire and brimstone rain down on Sodom and Gomorrah. Then the unexpected happened. Lot’s wife looked back with a degree of longing to return to what she had left, and she became a pillar of salt.  Her life was literally on the line, and rather than being fully engaged in surviving, she placed a higher priority on life’s lesser matters than on the greater one of preserving her life through God’s gift of protection. She looked back, revealing her heart still to be in Sodom, a type of the world. You cannot serve God and mammon. Her action indicated regret for having left. Jesus says, “No one who puts his hand to the plow and looks back is fit for the kingdom of God.” We must not let the past determine our future.

Today, let us resolve that the past will be the power from which we move forward, because the past is just that –“Past.” Paul is an example of a healthy view of the past. He owned his past as blasphemer, persecutor, and aggressor. He knew and accepted his past; he accepted responsibility and did not blame others for his actions. But, because Paul knew that he was forgiven, and because he confidently trusted God’s forgiveness, he did not retain the guilt of what he had done. He retained the memory, but it was his power, his strength, his motivation, his hope, and his ever present evidence and reminder of God’s grace.

It serves no purpose to deny, ignore, or hide the past. The past is to be accepted and owned.  But with that acceptance comes responsibility for the present, the ability to make choices, to grow, and to change.“….Forget those things which are behind, and reach forth unto those things which are before, and press toward the mark for the prize of the high calling of God in Christ Jesus!” {Phil 3:13-14}…. “Free at last, free at last, thank God Almighty, I’m free at last!”