Lowey Announces Reduced Interest Rates for College Students

Congresswoman Nita Lowey (D-Westchester/Rockland) and VP of Student Services Margaret McGrail announced that as of July 1, the interest rate on federally-subsidized college loans was reduced to 3.4 percent, half the interest rate of three years ago.

"I talk to a lot of young people, and most seem to work two or three job in addition to going to school," Lowey said. "Many are first-generation college students who wouldn't have the opportunity to go to college without these federally-subsidized loans."

In 2008, Congress passed the College Cost Reduction and Access Act, lowering interest rates on subsidized student loans. 

As a result: 

• The interest rate on subsidized loans has decreased to 3.4 percent, cutting rates in half from just three years ago.
• New college affordability information is now available to help prospective college students and their families shop for the best value for a college education at www.collegecost.ed.gov.  Students and their families can estimate annual and total costs of a college education and financial aid available from various schools. 

“Lowering the cost of borrowing for college tuition is among the wisest investments we can make,” said Lowey.  “Cost should never be a disqualifying factor for students considering college, and cutting the interest rate on loans in half helps make the high cost of college easier to repay.”

Mercy College' McGrail applauded the legislation saying, "Cutting interest rates saves students an average of $2,500 per year in repayments. That's $10,000 saves for a four-year degree."

As a designated Hispanic servicing institution, Mercy College serves a large number of students that have benefited from both the reduction in the Stafford loan interest rates and the increase in the federal Pell grant allocations. Pell grants are federal grants which, unlike loans, don't have to be repaid.

“The interest rate reduction and Pell grant increase has made earning a Mercy College degree an attainable goal for our students," McGrail said.  

In addition to the College Cost Reduction Act, Lowey has supported other legislation to make college more affordable for Hudson Valley families, including:

• Establishing an income-based repayment program that makes student loan payments more manageable by guaranteeing that borrowers will not have to pay more than 15 percent of their discretionary income in loan repayments.
• Providing loan forgiveness for graduates who become teachers, public defenders, firefighters, police officers, nurses, and other public servants.
• Increasing the maximum Pell grant award from $4,000 to $5,500 per year—which, she said, is vital for the 373,238 students in the New York area who depend on financial assistance for college.

Learn more about Pell grants versus Stafford loans here.