Stafford Loan Interest Rate Reduction: Background and Issues (CRS Report for Congress)
| Release Date |
Revised July 20, 2007 |
| Report Number |
RS22568 |
| Report Type |
Report |
| Authors |
David P. Smole, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Subsidized and unsubsidized Stafford Loans are the primary sources of federal loanaid available to assist students finance the costs of a postsecondary education. Theseloans are made available under both the Federal Family Education Loan (FFEL)program, authorized under Title IV, Part B of the Higher Education Act (HEA); and theWilliam D. Ford Direct Loan (DL) program, authorized under Title IV, Part D of theHEA. Through these programs, students may borrow loans with terms and conditionsthat are generally more favorable than loans from private lenders. Effective July 1,2006, the interest rate on new Stafford Loans is fixed at 6.8%. For loans made on orafter October 1, 1992, and prior to July 1, 2006, interest rates were variable and adjustedannually. Proposals to lower interest rates on subsidized Stafford Loans are expectedto be considered in the 110th Congress. This report provides a brief overview of selectedterms and conditions of Stafford Loans, characteristics of borrowers, and a descriptionof how reduced rates would compare with current terms and conditions.
