On July 1, 2006 the
interest rates on outstanding federal student loans are expected to rise
to just over 7 percentthe highest rate in six yearsand 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 |