Federal Stafford & PLUS Loan Program Updates

Update added 7-1-2009

New Fixed and Variable Interest Rates

Fixed Interest Rates
Stafford and PLUS loans first disbursed on or after July 1, 2009 – June 30, 2010 have the following fixed interest rate while in grace, deferment, in-school, repayment and forbearance.

Undergraduate Subsidized = 5.6%
Undergraduate Unsubsidized = 6.8%
Graduate Subsidized & Unsubsidized = 6.8%
Parent/Grad PLUS Loans = 8.5%

Variable Interest Rates
Loans first disbursed between July 1, 1998 and June 30, 2006 have variable interest rates, which adjust annually on July 1, but rates will not exceed 8.25% for Stafford loans and 9.0% for PLUS loans.

Effective July 1, 2009 - June 30, 2010 variable interest rates are:
Subsidized and Unsubsidized Stafford Loans (In-School, Grace or Deferment) = 1.88%
Subsidized and Unsubsidized Stafford Loans (Repayment or Forbearance) = 2.48%
Parent / Grad PLUS Loans (All statuses) = 3.28%

Update added 7-1-2009

New federal loan repayment option: Income-Based Repayment
Income-Based Repayment is a new option effective July 1, 2009 for borrowers who experience a partial financial hardship (as explained below). Under this plan, your required monthly payment amount is determined by your annual gross income (AGI) and the poverty level associated with your family size and state of residence. If your total annual student loan payments are greater than 15% of the difference between your AGI and 150% of the poverty level applicable to you, you are considered to be experiencing a partial financial hardship and are eligible for the Income-Based Repayment plan.

Example: For 2009, 150% of the poverty level for a family of 1 living in Texas is $16,245. A borrower with an AGI of $40,000 would have a partial hardship if his/her annual student loan payments were greater than $3,563, or $296 per month ($3,563 is 15% of the result from subtracting $16,245 from $40,000).

The maximum repayment period under this plan may exceed 10 years. If after 25 years of qualifying payments your student loan balance is not paid in full, your remaining balance will be forgiven. The Income-Based Repayment plan is not available for Parent PLUS loans, Consolidation loan(s) that repaid any Parent PLUS loan or any defaulted loan(s).

Update added 5-12-2009

New Federal Stafford Loan Addendum for borrowers with existing MPN’s
This addendum incorporates updated information to the loan terms and conditions of all Federal Stafford loan Master Promissory Notes (MPN’s) originated by Higher Education Servicing Corp. (HESC) and signed by the borrower prior to 5-12-2009.

Click here to view or print a PDF version of this updated addendum.

Update added 5-12-2009

New Federal PLUS Loan Addendum for borrowers with existing MPN’s
This addendum incorporates updated information to the loan terms and conditions of all Federal PLUS loan Master Promissory Notes (MPN’s) originated by Higher Education Servicing Corp. (HESC) and signed by the borrower prior to 5-12-2009.

Click here to view or print a PDF version of this updated addendum.