After graduating from The University of Texas-Pan American in December with a degree in English and $8,000 in student loans, Denise Maldonado was happy to hear that interest rates on federal student loans were reduced starting July 1.
Maldonado said the reduced interest rate will help her save money when she starts paying back her loans.
As part of the College Cost Reduction and Access Act of 2007, the interest rates on subsidized federal student loans decreased from 6 to 5.6 percent starting July 1. The rate will continue to drop annually until it reaches 3.4 percent in 2011.
"These savings will allow us to keep more money in our pocketbooks. And in these challenging economic times, we all know that every penny we can save is welcomed," said Congressman Henry Cuellar (TX-28), who hosted a press conference at South Texas College June 30 to announce the college loans reduction program.
Another change also in effect July 1 increases the maximum Pell Grant scholarship for the 2009-2010 academic year to $5,350 - more than $600 above last year's award.
UTPA Interim President Dr. Charles A. Sorber said the act will not only help students in South Texas, but across the nation. Last year, UTPA students borrowed $39 million and 68 percent received financial aid.
"This coming year, the Pell Grant will cover all mandated tuition and fees for those students who take 12 hours or less," Sorber said. "One of the things we are proud of at UT Pan American is the fact that even though we're the 10th largest public institution in the state of Texas, our cost of education is 30th in the state. Historically, the institution has made considerable effort to keep the cost of education as low as possible."
Other benefits that go into effect today include a new income-based repayment program that caps borrower's monthly loan payments at just 15 percent of their discretionary income. Any current or future borrower whose loan payment exceeds 15 percent of their discretionary income is eligible. After 25 years in the program, borrower's debts will be completely forgiven.
Also, the law provides up-front tuition assistance - known as TEACH Grants - of $4,000 a year for a maximum of $16,000 to students who commit to teaching high-needs subject areas in high-needs schools for four years after graduation. Graduates who enter into public service careers such as teachers, public defenders and prosecutors, firefighters, nurses, nonprofit workers and more, will be eligible for complete loan forgiveness after 10 years of qualifying service and loan payments.
"These are extraordinary measures that will certainly go a long way in helping UTPA achieve its mission of student access and success. In fact, almost all our students will be positively impacted in one way or another," Sorber said.
For more information about the new benefits of the College Cost Reduction and Access Act, call the UTPA Office of Financial Aid at 956/381-2501.