CORVALLIS - Interest rate drops on college direct loans will give some students borrowers and their parents big savings during repayment.
The new incentives, which affect students who repay their loans on time or consolidate them into the direct loan program, will save students and their parents more than $600 million during the next five years, said Kate Peterson, Oregon State University director of financial aid.
And for some teachers in high-need areas, the U.S. Department of Education is willing to forgive up to $5,000 in loans.
More than half of the nation's college students receive financial aid, with loans accounting for 60 percent of the average student aid package, Peterson said. Typically, undergraduates will amass about $16,500 in loans by the time they graduate.
Beginning with the current 2000-2001 academic year, students will be eligible for a rebate worth 1.5 percent of loans made through the William D. Ford Federal Direct Student Loan Program. The rebate saves a borrower $150 on every $10,000 in loans.
Students who consolidate their loans with the federal direct student loan program will see costs cut with a new interest rate that's 0.8 percent lower than they are currently paying. The rate cut saves students with $10,000 in loans more than $500 dollars and more than 400,000 students are expected to qualify.
The measures are in addition to the 0.25 percent interest reduction already given to direct loan borrowers who repay their loans through electronic debit accounts.
Teachers who agree to serve at needy schools in designated areas can have up to $5,000 in loans forgiven after five consecutive years of teaching, at least one of which must have been 1998-99 or later. Through 2003, more than 25,000 teachers are expected to receive $122 million in loan forgiveness.
For more information on student loan programs and policy, or other financial aid issues, contact OSU Financial Aid at 541-737-2241 or a college or university student aid office. Most high school counseling offices also offer information on student loan programs.