Student loan rates at all-time low under new program

Posted: Friday, October 18, 2002

JUNEAU (AP) -- Under a new state program, Alaska student loan interest rates are the lowest they've ever been.

Alaskans who attend college in-state can borrow at interest rates below 2.5 percent.

The state has offered a student loan program since the 1970s. Over the years, Alaska students have borrowed from the state at an interest rate of between 5 percent and nearly 9 percent. Students borrowed $54 million last year.

The new AlaskaAdvantage program offers state and federal loans.

A federal loan offered through AlaskaAdvantage allows Alaskans who attend college in-state to borrow at an interest rate of 1.46 percent this year. The same program offers loans for Alaska students who attend school out of state an interest rate of 2.46 percent.

Students who do not meet income requirements for federal loans may borrow from the state at a rate of 1.96 percent for in-state attendance, and 2.96 for out-of-state attendance.

Diane Barrans, executive director of the state Commission on Postsecondary Education, said it is hard to compare the old loans with the new loan program.

''It's sort of apples and oranges,'' she told the Juneau Empire.

Under the old program, Alaska students borrowed at a fixed rate, but under the new program the rate changes yearly. The AlaskaAdvantage rates can go no higher than 8.25 percent. Also, under the old program students who borrowed did not accrue interest until they completed school. With the AlaskaAdvantage program, interest begins to accrue as soon as loans are granted, Barrans said.

Though Alaska students who borrow now may be getting a good rate, students who borrowed under the old program at a higher, fixed-interest rate will not feel any immediate relief. The state student loan corporation is looking into developing a loan consolidation program that will offer older borrowers a lower rate, Barrans said.

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