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by Kim Clark
Government streamlines application, reduces rates
Now that the hype surrounding the government's overhaul of the scandal-tinged federal student loan program has settled, students and parents seeking loans for the 2010 academic year are getting some surprisingly good news: Many 2010 federal education loans will be cheaper, easier to get, and easier to repay than they've been in recent years.
Starting July 1, the federal government will lower the interest rates on many student and parent loans.
In addition, to save billions of taxpayer dollars and eliminate incentives for private companies to give kickbacks to colleges, the federal government will stop paying banks for making federally backed educational loans. No longer will those wanting a federal loan to help pay for tuition have--or have the opportunity--to shop for a student Stafford or parent PLUS loan. Starting July 1, students and parents will just fill out the standard applications, and tell their college they want a loan. Colleges will send all federal loan applications straight to the government, which will make all the loans directly. That will reduce the steps and confusion for many, if not most, borrowers.
The change will mean a some extra minor hassles, however, for a few million students and parents who took out federal loans from companies like
The rule changes are requiring many college financial aid officers to work out kinks, which means they may take a little extra time to respond to parents and students over the next couple months, says Sharon Hassan, director of financial aid at
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Copyright © U.S. News & World Report
Federal Student and Parent Loans Getting Cheaper and Easier