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News
Release June 2, 2003 Contact:
Sara Lang Etheridge Hails Lowering of
Student Loan Interest Rates New Interest Rates Will Save Typical Borrower $3,200 WASHINGTON - U.S. Rep. Bob Etheridge (D-Lillington) announced
today that the typical student borrower who consolidates his or her loans
could save thousands of dollars over the life of their loans due to new
low interest rates. Starting on July 1st, federal student loan interest
rates are expected to drop to a historic low of about 3.5 percent, from
the current rate of 4.06 percent. The expected new interest rates will save the typical student
borrower approximately $3,200 over a standard ten-year repayment term,
Etheridge said. The analysis was based on an average debt of $17,000 over
a ten-year payback period with an estimated 3.5% Stafford loan interest
rate. The interest rates on federal student loans are re-set each year
on July 1st. "As the first member of my family to graduate from
college, I know firsthand that a quality education is the key to the American
Dream for working families," Etheridge said. "For thousands
of students and families these new low rates will help ease the burden
of paying off their college loan debt. These new, lower rates will provide
immediate relief for those who have invested in their education and their
future." Over the past eight years, the typical student loan debt
has almost doubled to $17,000. In addition, two-fifths of all student
borrowers now graduate with unmanageable debt levels. The Department of Education recently announced that borrowers
who apply for loan consolidation between now and June 30th will have their
application held until the new rates take effect on July 1st and will
then be granted the lowest available rate. Borrowers can apply for the
new rates until June 30, 2004. Consolidation may also deliver additional benefits to borrowers. Borrowers can eliminate the need to deal with multiple lenders, calculate loan payments based on a percentage of income, and extend their repayment period. The Department of Education also offers an interest rate reduction of .25%, to borrowers who make payments through automatic banking. Most federal loans can be consolidated either with the Department of Education or a private lender. Recent graduates may also be eligible to consolidate during their in-school or in-grace period, for additional savings of up to 0.6 percentage points. Borrowers interested in consolidating their loans with the lower interest rate formula should contact the Department of Education or their private lender. More information about direct loan consolidation is available from the Department of Education (1-800-557-7392 or http://loanconsolidation.ed.gov/). |
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