Students: Consolidate Loans Now To Save Thousands In Interest

Going to college is about to get even more costly.

At a time when rising tuition costs currently weigh heavily on future college graduates and their households, Congress recently passed an Expense raising rate of interest on student loans and cutting $13 billion from the federal student loan program. These higher rates promise to have a significant influence on the cost of paying back student loan financial obligation for years to come.

The Expense impacts Stafford loans -popular because they need no credit check or test to qualify-and PLUS loans, offered to parents of dependent undergraduate students, no matter monetary requirement.

Under the brand-new legislation, the rate of interest on new Stafford loans will jump to 6.8 % from the existing rate of 5.3 %, while the rate on brand-new PLUS loans will jump to 8.5 % from the current rate of 6.1 %. Both rates will be taken care of.

The typical expense of tuition, space and board has actually climbed at more than double the rate of inflation over the last 8 years. Such hikes have also indicated skyrocketing student loan financial obligation, which rose more than 70 % from $11,400 in 1997 to more than $20,000 in 2005.

Fortunately for current graduates or students who will graduate this spring is that they CAN still lock in a low fixed rate. But there’s very little time. With rate hikes anticipated to work on July 1st of this year, loans should be consolidated by June 30, 2006.

“Time is absolutely of the essence-particularly for this year’s graduates,” said Frank Ballmann, student loan specialist and an executive vice president at consolidation leader Educational Direct. “They’ll have to act rapidly after college graduation to obtain the pre-July 1 rates, which would increase by over 1.5 % on July 1 based on today’s rate of interest.”

Ballmann provides the following pointers for students and their parents:

• • Students with $20,000 in student loan financial obligation would pay an additional $300 in interest next year, based upon the recent rise in rate of interest, if they do not lock in the present loan consolidation rate.

• • The rate of interest for consolidation loans can be secured at a set rate for as long as it takes you to repay your loan.

• • Consolidation saves money and time-lowering regular monthly payments with a single set interest rate and streamlining the loan payment procedure with one month-to-month payment.

• • There are no charges or credit checks to consolidate student loans; it is free and is a best given to borrowers under the federal loan programs, licensed in the College Act.


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