Student Loan Guidelines Lessen Interest Rates

Changes in the federal student aid program that took effect yesterday will lessen interest rates for some students while increasing the amount they can borrow.

Among the biggest changes, the interest rate on new, subsidized Stafford loans to undergraduates drops from 6.8% to 6%. Subsidized Stafford loans are awarded to lower-income students, and the government picks up interest payments while students are still in school.The rates are slated to decline in stages over the next five years, part of congressional measures approved last year to increase student aid. Earlier this year, responding to the credit crunch, Congress also approved $2,000-per-year increases in what students can borrow from unsubsidized Stafford loans.