Sallie Mae Tip On Paying For College: If You Need To Borrow, The Coming Year May Offer Lower Rates

Students who need extra funding for college can take advantage of changes in the law and improvements in the economy that translate into student loans at among the best interest rates in the last five-year period, says Sallie Mae, the nation’s No. 1 financial services company specializing in education.

“The good news for college students is that interest rates on several kinds of student loans are among the lowest in recent history,” says Joe DePaulo, executive vice president, Sallie Mae. “Our ‘How America Pays for College’ national study confirms that students and parents alike value the investment in a college education and are willing to stretch themselves financially in order to make it happen. Sallie Mae advises families to follow our 1-2-3 approach to paying for college so that you do not pay more for college than you have to: first, maximize ‘free money’; second, if you need to borrow, consider federal loans, and, third, fill the gap with responsible private education loans.”

While deadlines for many scholarships for the 2011-12 academic year have passed, Sallie Mae’s free scholarships database can help students identify any last-minute opportunities. In addition, it’s not too late to complete the FAFSA or Free Application for Federal Student Aid to check eligibility for federal grants.

For the 2011-12 academic year, interest rates on new need-based federal Stafford student loans will drop by more than 20 percent, from 4.5 percent to 3.4 percent, fixed. Rates on non-need-based federal Stafford loans or graduate Stafford loans remain at 6.8 percent, and PLUS loans remain at 7.9 percent, both loan types with rates fixed for the life of the loan. Most students awarded subsidized loans come from families with annual incomes under $50,000, though some with higher incomes can qualify due to family size or other factors. Dependent undergraduate students can borrow a maximum in subsidized federal Stafford loans of $3,500 for freshmen, $4,500 for sophomores, and $5,500 for juniors and seniors.