Interest rates decrease on federal student loans

Posted July 01, 2009, at 7:08 p.m.

Paying for college got a little easier Wednesday.

The College Cost Reduction and Access Act, signed into law by President Bush in 2007, increased Pell Grant awards and reduced interest rates for federal Stafford Loans.

Total government spending on Pell Grants, which are need-based, increased $60 million to $3.03 billion.

The interest rate on subsidized Stafford Loans decreased from 6 percent to 5.6 percent, according to a news release from Rep. Mike Michaud, D-Maine.

As of Wednesday, borrowers may participate in a new income-based repayment program that caps monthly loan payments at 15 percent of a person’s discretionary income.

The law also includes concessions for anybody who has worked in a public service profession for 10 years directly after college: Their remaining college loans are completely forgiven.

Firefighters, public defenders and prosecutors, first responders, law enforcement officers, early-childhood educators, military men and women are included in the list of public service professionals.