Mo. student loan agency axing interest rate breaks

Missouri's loan agency has shaved between 2 and 3 percentage points off the interest rates charged to people who pay by automatic withdrawal, depending on whether they attended school in state and whether their loans are guaranteed by the state.

That will drop to a one-quarter of a percentage point reduction beginning June 1, Bayer said.

The loan agency also will cease a program that offered interest rates of 3.25 percent--or 0.25 percent if payments were made through automatic withdrawal--for students who remained to work in Missouri as teachers, nurses, police, firefighters, paramedics, social service workers, state employees or members of the National Guard or reserves.

Bayer said those two interest-rate-reduction programs have benefited fewer than 5 percent of MOHELA's loan recipients, or about 23,000 of its roughly 500,000 borrowers. Those loans account for about $170 million of its $5.1 billion in loans, he said.

The agency will continue to offer loan forgiveness programs, including one it announced in December 2006 for college freshmen enrolling in pre-engineering programs.