Spring Break
Student loan rates slated to increase July 1
Jason Gomes
Issue date: 6/2/06 Section: News
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A graduating student with a $20,000 balance who consolidates before July 1 at the 4.75 percent interest rate will pay $129 on a monthly basis.
If that student chooses to wait until after July 1 to consolidate at 6.625 percent, they will have to pay $151 per month. This would result in paying $5,123 more in interest over the loan's lifetime.
Stafford Loan interest rates will to rise from 4.7 percent to 6.54 percent. The current rate for PLUS loans, 6.1 percent, will rise to 7.94 percent. The Stafford Loans repayment will rise to 7.14 percent.
Melissa Englund, executive director of the Student Financial Aid Office, claims that the loan provider is the best place where students can consolidate their loans.
"Students who have an American Education Services, Pennsylvania Higher Education Assistance Agency loan, Sallie Mae loan or any other lenders to contact them immediately and do not wait until the last moment to do this," she said. "The process for consolidation takes a long time and involves a lot of paperwork, and therefore [students] should not wait until June 30 to start the work. Their staff will take you throughout the entire process."
The University informed the students about consolidating their loans in the past few months by sending University-wide e-mails, offering workshops and handing out pamphlets on campus. Englund said that her office will hold additional workshops over the next few weeks.
Students can currently take advantage of this loophole to consolidate their loans at no additional cost and lock in the lowest interest rates in the history of the Federal Family Education Loan Program.
"Student loan consolidation is the best way to protect yourself from a very significant interest rate increase on July 1," said Keith D'Ambra, senior vice president of loan consolidation for Sallie Mae, in a May 30 press release. "Time is money, and waiting too long to consolidate your student loans will cost you for many years into the future."
"With interest rates currently at their fourth-lowest levels in history and set to rise, it is important for both students and parents to carefully consider their consolidation options in order to take advantage of significant savings," said Richard Bellows, executive director of financial aid at Butler University, in the press release. "We are encouraging our continuing students and their parents, as well as this spring's graduates, to act quickly to reduce their education borrowing costs."
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