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Consolidating Student LoansOn July 1, 2006 the interest rates on outstanding federal student loans are expected to rise to just over 7 percent—the highest rate in six years—and the rate on outstanding federal parent loans are expected to rise to about 7.8 percent. Student borrowers who consolidate before July 1st may be eligible to lock in a rate as low as 4.75 percent over the life of their loan(s)—which would save the typical undergraduate borrower almost $3,500 over the life of his or her loan. But students and parents must act quickly to ensure that they can lock in these lower rates. What is loan consolidation? Why should student and parent borrowers consider consolidating before July 1, 2006? Consolidation may also deliver other benefits to borrowers such as eliminating the need for dealing with multiple lenders or allowing borrowers to enroll in payment plans based on a percentage of their income. Borrowers who make a set number of on-time repayments or who make payments through automatic banking can obtain additional interest rate reductions. How can I consolidate my loans? If you have loans with more than one lender you can chose to consolidate through the Department of Education or with any lender that provides federal consolidation loans. When is the deadline to consolidate and lock in a low fixed rate? Can student borrowers consolidate their loans while they are still in-school? Can borrowers reconsolidate their loans? Can borrowers consolidate Perkins loans? For more information borrowers should contact the Department of Education at 1-800-557-7392 or http://www.loanconsolidation.ed.gov . How are Democrats working to make college more affordable? Earlier this year, the Republican-led Congress cut $12 billion out of the federal student aid programs in order to help finance tax breaks for the wealthiest Americans. As a result of this Republican Raid on Student Aid, college is even further out of reach for millions of American students and their families. In contrast, Democrats continue to work to make college more affordable. House Democrats introduced legislation, the Reverse the Raid on Student Aid Act (H.R. 5150), that would cut interest rates in half from 6.8 percent to 3.4 percent, for students with subsidized loans - which go to students with the most financial need - and from 8.5 percent to 4.25 percent for parent borrowers, starting in July 2006.* Under H.R. 5150, the typical undergraduate student borrower with $17,500 in student loan debt would save $5,600 over the life of his or her federal college loans. * Beginning on July 1, 2006 all NEW student and parent loans will be set at fixed rates of 6.8 percent for undergraduate students and 8.5 percent for parent borrowers. For more information please visit: http://edworkforce.house.gov/democrats/education_raidonstudentaid.shtml |
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