Representative Ike Skelton

FOR IMMEDIATE RELEASE	Contact: Lara Battles or
Wednesday, June 7, 2006	Whitney Frost (202)225-2876

SKELTON URGES STUDENTS TO CONSIDER LOAN CONSOLIDATION

Student Loan Interest Rates Increase on July 1

Washington, DC – Congressman Ike Skelton (D-MO) urges students to consider consolidating their federal student loans before interest rates increase on July 1, 2006.

“Today’s lower interest rates on student loans will not be available to borrowers after July 1. Locking in a lower interest rate can save borrowers thousands of dollars over the life of a loan, which means real savings on college costs for students and families,” said Skelton.

Federal student loan interest rates are set each year on July 1, based upon rates determined at the final May auction for 91-day Treasury bills. For those in school or in a grace or deferment period, the new interest rate for Stafford loans will be 6.54 percent. For those already making repayment, the interest rate for Stafford loans will be 7.14 percent. Rates on the Parent Loan for Undergraduate Students (PLUS) will be 7.94 percent. The new variable rates are effective from July 1, 2006 until June 30, 2007.

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.

Financial experts say that student loan borrowers may want to consider consolidating their loans by June 30 in order to lock in a low rate before the interest rate goes up. Even students who are still in school may be eligible to consolidate their existing loans to take advantage of the current interest rates.

Most federal loans can be consolidated with either the U.S. Department of Education or a private lender. The interest rate for consolidated loans is based on the weighted average of loans consolidated, rounded up to the nearest one-eighth of one percent.

For information on student financial aid, visit the U.S. Department of Education’s web site at www.ed.gov. To learn more about student loan consolidation, borrower benefits, and eligibility requirements, visit www.loanconsolidation.ed.gov or call the Direct Loan Consolidation Center at 1-800-557-7392 or (TDD) 1-800-557-7395.

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Congressman Ike Skelton (D-MO) serves as Ranking Democrat on the House Armed Services Committee. For further information, please contact Lara Battles or Whitney Frost at (202)225-2876, or check Congressman Skelton's web site at http://www.house.gov/skelton.