Economy, interest rate, lowering of the prime

<p>Trying to figure out (not really knowledgeable about economics) if banks lower the interest rates on loans because the federal government is trying to stimiluate the economy; will federal subsidized student loans then be at a lower rate? Will that affect loans that students already have? Also, will the "student loans" one can get independently from the banks be offered at a lower interest rate too? Thank you in advance for the economics lesson.</p>

<p>Yes, if the FED lowers interest rates then borrowers pay back their loans at lower interest rates. Unfortunately, the value of the dollar will plummet</p>

<p>There has been no talk of reducing the Federal student loan interest rates which were set for the next few years by The College Cost Reduction and Access Act of 2007. </p>

<p>Stafford sub loan rates are reducing over the next few years based on The College Cost Reduction and Access Act of 2007. 2008-2009 subsidized Stafford loans are 6%, 2009-2010 will be 5.6%. Previous loans taken out are not being reduced to 6% but will stay at the rate when they were borrowed - for instance 2007-2008 subsidised loans were borrowed at 6.8% - they will probably remain at 6.8% .</p>

<p>Perkins is 5%.</p>

<p>Unsub Stafford remains at 6.8%.</p>

<p>When you have borrowed money at a certain interest rate it normally stays at that rate. You would have to take out a new loan to get the new rate. For instance most mortgages are fixed rate - to get a lower rate you have to refinance.</p>