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Student Loans on Increase at YSU
YOUNGSTOWN, Ohio -- Interest rates on student loans are at a historic low, and more Youngstown State University students and families are taking advantage of them, says Elaine Ruse, director of the YSU Office of Financial Aid and Scholarships. Last academic year, YSU processed $43.7 million in Stafford and PLUS loans, more than double the $19.5 million in the 1999-2000 academic year.Rates for federally subsidized (for students that qualify by income level) and unsubsidized loans, or Stafford Loans, are now 3.37%, down from 3.42% a year ago and 8.19% in 2001, Ruse notes. Repayment is deferred until six months after graduation.The rate for federal PLUS Loans (for parents of dependent undergraduate students) is now 4.17%, down from 4.22% a year ago and 8.99% in 2001."Under a 10-year standard repayment plan, a lower rate reduces the amount of interest costs accumulated over the life of the loan," Ruse says. "Students and parents can save a considerable amount of money."Ruse remembers loans rates hovering around the federal government's maximum allowable rate of 9% for PLUS loans in recent years. "I've seen these rates approaching the cap," she says. "What we've had the last two years are historic drops in interest rates. This year's rate is the lowest I have ever seen, which will save money for numerous borrowers."To illustrate the savings, if a student borrowed $10,000 at 8.19% and took 10 years to repay, the total cost of the loan would be $14.680.07. At 3.37%, the total cost drops to $11,793.37, a savings of nearly $3,000, according to Bankrate.com.However, Ruse says it's important to remember that student loans are variable rate loans. The rate is set annually on July 1 based on a Federal Treasury bill auction. The new low rate applies to loans disbursed after July 1, 1998, and remains in effect through June 30, 2005.With tuition rising and interest rates falling, the number of students accepting loans is growing. "Loans are the largest program we administer as an office," Ruse says.In the past many families, especially those of first generation students, were not initially interested in loans, Ruse notes. "I think the lower interest rates may have actually encouraged the additional borrowing needed for school-related expenses because the savings during repayment is more substantial," she says. "Student loans can be viewed as an investment in the future. A lower interest rate on money borrowed is a better investment."Visit YSU's financial aid office: www.ysu.edu/finaid"