(U-WIRE) PROVO, UT -- Interest rates on recent student loans will fall to all-time lows on July 1, 2001, according to the United States Department of Education.
Former students repaying loans have paid an interest rate of 8.19 percent since last July, said Stephanie Babyak of the department's office of public affairs.
The interest rate will drop to 5.99 percent on July 1, Babyak said. The interest rate has never dropped below 6 percent, she said.
A borrower who repays loans under a standard 10-year plan can save $136 in interest for every $1,000 of outstanding loans, Babyak said.
Tracie Burton has been paying on her student loan for about 8 months. She had to pay about $8,500 in a three-month period to attend the Utah College of Massage Therapy.
"I had to take out a loan somewhere," she said.
Burton is happy to see the interest rate drop. She will still need about five years to pay the loan back, she said.
Two other loan rates will drop by 2.2 percent in July, Babyak said. The 7.59 interest rate charged to new borrowers and students who are still in school or in the grace period extending six months beyond graduation, will drop to 5.39 percent, Babyak said.
Federal Stafford loans taken out after July 1, 1993 have a variable interest rate that is adjusted once a year, said Stephen Olsen of Brigham Young University Student Financial Aid.
Subsidized Stafford loans allow students to put off paying interest until after graduation.
A student's income, assets, family size and estimated student and family contribution determine qualification for a subsidized Stafford loan, Olsen said.
The rate for parents repaying PLUS loans will drop from 8.19 percent to 6.79 percent, Babyak said.
A PLUS loan is a loan offered to parents of undergraduate students. PLUS loans have variable interest rates with no grace period, Olsen said.
State colleges and universities offer additional loan programs including Perkins loans and campus-based grants that mix institutional and federal funds.
"BYU has not been willing to co-mingle federal and institutional funds," Olsen said.
