Even today, the most popular type of mortgage financing comes with a 30-year term and fixed interest rates, but another loan type is growing far more popular as a result of the continued low interest rates available nationwide as well. These days, consumers are slowly beginning to favor 15-year fixed-rate mortgages over their 30-year counterparts because of just how affordable they’ve grown in the last year or… Read More
The latest round of credit card changes are coming in the form of switching fixed rate cards to variable rates. By switching to a variable rate, credit card issuers are basically ensuring that they’ll be able to adjust the interest rate (based on the prime rate) without having to notify the consumer under the new laws.
Assuming the Act survives the legal challenges against it, there are a host of other bills now in committee that would make more changes to the existing programs. For example under some of the pending bills in Congress:
* The rates on PLUS loans will be fixed at 7.9% with a ceiling of 8.5%.
* Variable rates issued before July 1, 2006 will continue to adjust every year. That will mean that PLUS loans will not be as competitive as other financing options like a home equity loan. And borrowers will no longer be able to refinance PLUS loans if the rate drops. They can be consolidated into fixed-rate loans, but the rate on consolidation is the weighted average of the rates on the loans being consolidated. Now may be a good time to think about consolidating existing loans. However, if you look at the last 20 years it seems that students are better off if they have variable rate loans but it is always a gamble.
* Stafford loan limits for first and second year college students will increase: Starting 7/1/2007 the proposed limit for freshmen will rise to $3,500; sophomores could borrow $4500; while Juniors and senior could borrow $5,500.
* Graduate and professional students will be able to apply for PLUS loans.
* Stafford loans origination fees will phase out fall to 2% and then ½ percentage point per year until 2010.