The new health insurance laws contain a major change for student loans. Starting July 1, all federally guaranteed loans will be made directly by the federal government. Once a student’s loan is approved by the school, the money will come from Uncle Sam.
Previously, about 15% of all colleges and universities offered these direct federal loans. The other schools would tell their students to find private lenders, which would make loans guaranteed by the federal government.
The primary beneficiaries of these new rules may be parents and graduate students who use PLUS loans to pay higher education costs:
PLUS loans my be easier to get. These loans are subject to credit checks. Historically, direct PLUS loans have had higher acceptance rates than private loans.
PLUS loans will be less expensive. Because most schools sent borrowers to private lenders, most PLUS borrowers paid 8.5%, the fixed rate on private PLUS loans. Now all PLUS borrowers will pay only 7.9%, the fixed rate on direct PLUS loans.
