Washington, D.C. – U.S. Senators Blanche Lincoln and Mark Pryor and U.S. Representatives Marion Berry (AR-01), Vic Snyder (AR-02), Mike Ross (AR-04), and John Boozman (AR-03) today encouraged those persons with outstanding federal student loans to consider consolidating them by July 1st, when interest rates are expected to increase to their highest rate in six years. Consolidation allows borrowers to combine multiple student loans into one and lock in a fixed interest rate, which could save thousands of dollars over the life of the loans.
Each year the U.S. Department of Education adjusts the interest rates on outstanding college loans. Rates on student loans are expected to rise to just over 7 percent and rates on parent loans are expected to rise to 7.8 percent. Student borrowers who consolidate their outstanding loans before July 1st would be eligible to lock in an interest rate as low as 4.75 percent, saving an average of about $3,500 over the life of the loan. Parent borrowers who consolidate before July 1st would be eligible to lock in a rate as low as 6.1 percent.
If individuals think that loan consolidation is right for them and they have a Direct Loan through the Department of Education, they may call 1-800-557-7392 or apply online at http://www.loanconsolidation.ed.gov. If they have a loan through the Federal Family Education Loan program (a bank-based loan), they can contact the company that owns the loan(s). If the loans are with more than one lender, individuals can consolidate through the Department of Education or with any lender that provides federal consolidation loans.
