There is good news for college students using federal financial aid this year: Pell Grant maximums will increase and student loan interest rates will decrease to record lows.
The maximum amount for Federal Pell Grants issued between July 1, 2020, and June 1, 2021, will rise to $6,345, an increase of $150 from the 2019-2020 rate. Federal Pell Grants usually are awarded only to undergraduate students and are based on financial need.
Children of veterans who died as a result of service in Iraq or Afghanistan after the events of 9/11 may be eligible for the Iraq & Afghanistan Service Grant. It is similar to a Pell Grant, but unlike a Pell Grant is not limited by family income.
Federal grants are free money for school. After your school bills are paid, any remaining balance goes to you. You can normally receive only one federal education grant per school year, but there are some special programs available for low-income families that will allow you to get more than one grant at a time. Learn more about Federal Student Aid.
Federal Student Loans
Federal student loan interest rates are also changing on July 1, 2020. The interest rate for new undergraduate loans issued on or after July 1 will drop from 4.53% to 2.75%. That is a record low.
The interest rates for graduate loans will also drop from 6.08% to 4.3%, and PLUS loans (which are usually issued to the parents of a student or to graduate or professional students) will drop from 7.08% to 5.3%.
These interest rates are only for student loans issued on or after July 1, 2020. Loans that were issued prior to that date will keep their current interest rate no matter how much is still owed.
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