NEW YORK (AP) — Interest rates on federally backed loans for college students are expected to fall to a record low for the 2004-05 academic year, lending institutions said.
The rate on the federal Stafford loan for students should fall to 2.77 percent in the next academic year from 2.82 percent in the current year, while the rate on the federal PLUS loan that parents take out should drop to 4.17 percent from the current 4.22 percent.
The new rates were calculated by Reston-based SLM Corp., better known as Sallie Mae, one of the leading college lenders.
The rates, which go into effect July 1, are based on a formula that keys off the rate on the three-month Treasury bill auctioned yesterday. That bill carried a discount rate of 1.05 percent, with a yield of 1.07 percent. The yield a year ago was 1.12 percent.
The Department of Education is expected to make a formal announcement of the new rates later in the week.
Students who have graduated can refinance loans at rates as low as 3.375 percent, down from the current 3.50 percent, loan companies said. Students who graduate this May and June may be eligible for even lower rates if they consolidate their loans this summer.
“With the soaring costs of attending college, these new low rates will come as welcome relief to millions of American families,” said Mark Brenner, executive vice president for College Loan Corp. of San Diego, which originates and refinances student loans.