A Look at New Student Loan Law

09/27/2007

By The Associated Press | September 27, 2007


The new student loan law signed by President Bush on Thursday would provide roughly $20 billion for financial assistance to college students. A look at the benefits:

_The maximum annual Pell Grant in the 2008-2009 school year will go up $490 to $4,800. The scholarship, which goes to the poorest students, will reach its maximum value of $5,400 per year by 2012-2013.

_Interest rates on federally subsidized loans will begin to decrease in July, when the interest rate will drop from 6.8 percent to 6 percent. Interest rates will be reduced by half, to 3.4 percent, by July 1, 2011.

- Annual payments for students will be capped at a percentage of their income to prevent people in low-paying jobs from having to pay back more than they can afford. Borrowers with new and existing loans will be eligible to enter into income-based repayment starting July 1, 2009.

_Undergraduate and graduate students who commit to teaching in public schools can receive tuition assistance of $4,000 each year, starting in the 2008-2009 school year.

_Public service workers, such as nurses or firefighters, will receive loan forgiveness after 10 years of service and loan payments. People will be able to take advantage of this beginning Oct.1.