Here is a Prediction. About 2 years ago families across the US were up in arms due to the variable rate Federal Student Loan Program. The rates were going up but did have reasonable caps on them. To appease the masses the governemtn stepped in and fixed the rates on Stafford Loans at 6.8% and Federal PLUS loans at 8.5%. Had they left the old program in place these rates would be more in the line of 3 % for Stafford loans and 5 % for PLUS loans.
I predict that the Department of education is going to have to address this in the upcoming year and Reauthorize the Higher Education Act to reflect interest rates that are more in line with the current environment. For those that are in their homes with substantial equity and students getting ready to go off to school I would suggest utilizing all Federal Stafford loans both subsidized and unsubsidized but turning to the Home equity line for additional financing if needed.
