Save Thousands on Your Student Loan Repayment. Take Action July 1st.
June 21, 2010
On July 1st, borrowers who have federal loans with a variable interest rate will be able to take advantage of some of the lowest interest rates in the history of student loan programs through loan consolidation.
Borrowers who consolidate will not only save themselves a lot of hassle but a great deal of money as well. The new interest rates will save borrowers thousands of dollars over the life of the consolidated loan. Here’s what you need to know:
July 1st, 2010
How to Consolidate:
Students can consolidate federal loans with the US Department of Education’s Direct Loan program at www.loanconsolidation.ed.gov
• Stafford Loan Consolidation (In-School/Grace Period): 1.88%
• Stafford Loan Consolidation (Repayment Period): 2.50%
• PLUS Loan Consolidation: 3.38%
What You’ll Save:
If you had a $20,000 Stafford loan with standard 10-year repayment plan and a 6.8% interest rate, you could expect to pay $230 a month and $7,619 over the life of the loan in interest.
But, if you locked in the 1.88% interest rate available after July 1, you’d pay $183 a month and only $1,955 in interest over the life of the loan. That’s a 20% lower monthly payment and total interest savings of $5,664 (74%).
Using the same example, with a 20-year repayment term, you could expect to pay a third less per month and three quarters less in total interest over the life of the loan, a savings of $12,629.
To see the requirements and exceptions to the new interest rate offerings, read the fine print here.
What if your loans are fixed rate? Since July 1, 2006, all new Federal education loans have had fixed rates. Consolidation will not change the cost of these loans. However, consolidation can replace multiple federal loans with a single loan, making your monthly payments easier to manage.
What if your loans are private? Students with private loans can consolidate too! But, private loans cannot be consolidated with federal loans. Private consolidation loans have variable rates, so you can’t lock in the current rate on your loans. Private consolidation loans are offered by four lenders that are listed at www.finaid.org/loans/privateconsolidation.phtml.