education loan:Cutting Stafford Interest Rates

Cutting Stafford Interest Rates


In today's society individuals need to get a college education if they want to have success. Society links education to an increase in health, wealth and social participation. However, as the need for a college education has grown so has the cost. As a result of this steadily rising cost student debt has dramatically increased.

Every year about 5.5 million students borrow from the government through the Stafford loans. The majority of these students or 3.3 million go to four year institutions that are either private or public. Many of the students who sign for loans are either from low or middle income families. The Congressional Research Services states that the majority of these students come from families who make less than sixty-seven thousand a year.

As a result one of the first proposal made by the new Democratic controlled Congress is to cut the Stafford loans fixed interest rate in half. Congress wants to reduce the interest from the current 6.8 percent to 3.4 percent. The total reduction would take about five years. As a result depending on the year students sign for their Stafford loans they will be having a different fixed interest rate until the year 2011 when the interest rates would stay at 3.4 percent.