Certain eligible low- and moderate-income students taking out new federal student loans will also see lower interest rates and higher Pell Grant scholarships.
“An affordable college education is essential to the American dream,” said Congressman Ruben Hinojosa.
The benefits are all kicking in as part of the College Cost Reduction and Access Act, which Hinojosa helped enact in 2007 under the new Democratic Congress. Any current or future borrower whose loan payments exceed 15 percent of their discretionary income will be eligible. After 25 years in the program, borrowers’ remaining loan balances, including interest, will be completely forgiven.
Other benefits that went into effect include:
•Cheaper interest rates on need-based (subsidized) federal student loans. On July 1, interest rates on these loans will continue to drop, from 6 percent to 5.6 percent.
•Higher Pell Grant scholarships for low- and moderate-income students.
In addition, Americans will continue to be able to enter into a new public service loan forgiveness created under the law.