Video of Congressman Sherman in Action
Washington, D.C. - Congressman Brad Sherman on Wednesday urged students and parents who borrowed for their children’s college costs to consider consolidating student loans before July 1, when interest rates are expected to rise to their highest level in six years.
Consolidation allows students and parents to combine separate loans and lock in a low fixed interest rate that could save borrowers thousands of dollars over the life of their loans.
“Interest rates are expected to jump on July 1,” Sherman said. “Smart borrowers could save thousands of dollars by locking in existing rates before then.”
Each year on July 1, the U.S. Department of Education adjusts the interest rates on outstanding college loans.
Interest rates on student loans are expected to rise to more than 7 percent, and interest rates on parent loans are expected to rise to 7.8 percent. Student borrowers who consolidate outstanding loans before July 1 would be eligible for an interest rate as low as 4.75 percent, which would save nearly $3,500 over the life of the average loan. Parent borrowers who consolidate before July 1 would be eligible to lock in a rate as low as 6.1 percent over the life of their loan.
Students and parents who have taken out at least one loan through the federal government's Federal Family Education Loan, Direct Loan or Perkins Loan programs may be eligible to lock in a low fixed rate if they consolidate by June 30.
Borrowers with a direct loan from the Department of Education may call 1-800-557-7392 or apply on-line. Students, college grads or parents with bank loans may contact one of the companies that own or service the loans. For answers to frequently asked questions about consolidating student loans, click on http://www.house.gov/sherman/student_loan_consolidation.shtml .
Rising interest rates, along with escalating tuition and shrinking student aid, have made college harder to afford for millions of Americans. Earlier this year, the Republican-led Congress cut $12 billion from federal student aid programs in order to help finance tax breaks for the wealthiest Americans. The cut aggravated financial woes for students at four-year public colleges where average tuition and fees have risen 40 percent since 2001. The typical student borrower now graduates from college with a record $17,500 in education debt.
