WASHINGTON (WUSA9) -- Paying for college will set you back $200,000 easily for private schools. Federal student loans can help get you through, but the rules are changing -- and they can cost you.
Susannah Snider with Kiplinger's joined us on Wednesday morning to explain.
The loans are getting pricier. "Those have to do with subsidized loans that cover their interest while you're in school. On July 1, barring any last-minute changes, the interest rate should double from 3.4 to 6.8%. It's not a reason to panic. It's only for new loans. Also on a $5500 Stafford loan, it will only increase your payments by about $9 ... So they're pricier but won't break the bank," said Snider.
They are doubling in terms of that interest rate. Interest starts sooner, too. You have to pay it back a little bit sooner. "In the past there was a six-month grace period during which you didn't have to pay your loans and also interest was covered. That interest grace period is going away. It will start accruing the moment you get your diploma," said Snider. "... It's not a huge amount, only about $120, but will make it a little pricier."
Grad students are losing a break. Snider told us, "They can't take out the subsidized loans. They can take out unsubsidized loans which have a 6.8% interest rate and is one of the best options for them."
PLUS LOAN borrowers are facing a higher hurdle.
"It's actually a little tougher to get a PLUS LOAN right now. The credit check you go through, you can't have an adverse credit history. The government has included some things to make it tougher.
"There are some options if you're denied. You can appeal the decision or find a co-signer but it's still going to be tougher this year," explained Snider.
Repayment plans are getting more generous. "This is a new income-based repayment plan called 'pay as you earn.' You have to have a pretty heavy debt loan to qualify but we have a link to a calculator on our website kiplinger.com. You can plug in your information and see if you qualify."
5 Things To Know:
- Loans get pricier
- Interest starts sooner
- Grad students lose a break
- PLUS LOAN borrowers face a higher hurdle
- Repayment plans get more generous