Photo by Ryan C. Harris
Daniel Wallen
Reporter
March 17, 2006
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Patty Edwards and Becky Brewster take time from their busy day to
flash a quick smile. Photo by Ryan C. Harris |
A recently passed bill will cut $12.7 billion from student-loan programs, but do not fear: the new law will have little effect on Milligan students, according to Director of Student Financial Services Becky Brewster.
The Deficit Reduction Act will have no effect on institutional scholarships; however, interest rates of the Stafford and PLUS loans will slightly increase. The Stafford unsubsidized, not need-based, student loan interest rate limit will increase from this year’s 5.3 percent repayment rate to 6.8 percent next academic year. Also, the Parent PLUS loan interest rate, currently 6.1 percent, will increase to 8.5 percent.
Brewster said that interest rates never remain the same year-to-year, but this comparison of change gives an idea of the impact of the increased interest rate.
Although interest rates are increasing, loan limits are also increasing. The limit for a Stafford unsubsidized loan for a first-year student is currently $2,625. This limit will increase to $3,500 for the fall 2007 semester.
The loan limit for second-year students will also increased from $3,500 to $4,500.
The maximum amount that may be taken out throughout one’s post-secondary education, the aggregate loan limit, has not yet increased, according to Brewster.
The aggregate loan limit for independent undergraduate students is $46,000, while the limit for dependent undergraduates is $23,000. For graduate students, the aggregate loan limit is $138,500.
Although students rarely exceed the set loan limits, Brewster said federal representatives have indicated to financial services that they plan on passing an act to increase the aggregate loan limit in the future.
Diane Keasling, coordinator of financial aid, said the loan limit increase is a good thing because “there have been several years with no increase in loans.”
“Students won’t have as much alternative debt (from other banks and outside sources),” Keasling said.
On average, students acquire $23,700 in debt over their four years at Milligan, Brewster said.
Last year, SunTrust Banks sponsored a “Financial Aid Night” in which lenders talked to students and parents about the process of applying for a loan. Brewster said the only conceivable setback besides the interest rate increases is that lenders may not be able to support Milligan in this same way due to the Deficit Reduction Act.
“More than one lender may have to sponsor the event if their funds are curtailed,” said Brewster.
Although lenders may be forced to make budget cuts, Keasling doubts that lenders would not come to talk with students and their families about loans since they are prospective customers.