Financial Aid >> Browse Articles >> Loans
Save Thousands on Your Student Loan Repayment. Take Action July 1st.
Featured Author:
Mark Kantrowitz
As a nationally recognized financial aid expert and publisher of Fastweb.com and FinAid.org, Mark has been called to testify before Congress about student aid on several occasions.
He has served as a guest columnist for the New York Times and the Huffington Post and has been interviewed regularly by major news outlets, including the Wall Street Journal, USA Today, MSN, CNN, NBC, ABC, CBS, CNBC and more.
Mark is the author of five books, including three about student aid. His most recent book, Secrets to Winning a Scholarship, helps families find and win scholarships. He is also on the editorial board of the Council on Law in Higher Education and the editorial board of the Journal of Student Financial Aid, a member of the board of directors of the National Scholarship Providers Association and a member of the board of trustees of the Center for Excellence in Education.
Mark is ABD on a PhD in computer science from Carnegie Mellon University (CMU) and holds Bachelor of Science degrees in mathematics and philosophy from MIT and a Master of Science degree in computer science from CMU.
Follow him on Twitter at @mkant.
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:
When:
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
New Rates:
• 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.
msfirerball40
12 months ago
I have student loans and the latest is 2010-2011 term and are presntly out of school due to health Issues and when I return I would like to transfer to another school which cost less. What should I do.
Student_Loan_Expert
about 1 year ago
Find PRIVATE STUDENT LOANS. Go to HTTP://FINANCEFROG.COM
sevenstevened
over 1 year ago
There are several of the finest fashionable ghd straighteners uk that you can see in the market today. Being a leader in fashion, Gucci’s products constantly highlight the latest, most fashionable styles of ugg boots. These shoes are made out of top quality materials and created delicately
ugg boots sale
uggboots
over 1 year ago
I think this is really great us college students need all the help we can get!!
Ugg Boots Sale fan
enternalstudent
over 1 year ago
Will students beginning college in the 2010-2011 school year be able to get these rates or something similar?
Carp Fishing Chairs fan
uggboots
over 1 year ago
I need more information on this please Ugg Boots UK fan
uggboots
over 1 year ago
Wow what great advice on how to save money. I hope everyone takes this advice. Ugg Boots Sale fan
enternalstudent
over 1 year ago
These are impressive savings. I hope everyone took the advice in time.
LauraR1137
over 1 year ago
When you read the "fine print" or call for additional information, you find out that the new interest rate on your consolidated loan is the weighted average of the loans you are consolidating. So, if you have five loans at 6.8%, and two at 6.0%, depending on each loan amount, the weighted average could be about 6.75%. Then it's ROUNDED UP one-eighth of one percent. It doesn't come out to the 1.88% initially stated in the article. Here's the fine print "The interest rate on a consolidation loan is the weighted average of the interest rate on the loans being consolidated, rounded up to the nearest 1/8th of a point and capped at 8.25%."
So, there you have it.
Fastweb34780
over 1 year ago
Hello sr/Meddam
I want to study abroad out of my country so that to do this I have no money but I have good knowledge so if you may please consider me contact me by these address gelana19@yahoo.com or
Gelana Daba
Ethiopia
Westshewa
Ambo
P.o.Box 181
Withregards!
ChristinaD469
over 1 year ago
Could i I have more information on this. How do I go about consolidate my loans for the past 2 years and will be looking for loans for this year
FreemanB5
over 1 year ago
I need information regarding pay back of my student loan
prodriguezj
over 1 year ago
After my parents lost everything, they stopped paying for my education without me knowing. Since they always received the school notices and mail i never knew until i wanted to apply for my second year schedule and was told my acount had been send to collections! My parents finally fessed up but since the account is now in collections its rounded up about $40,000! So not only will the school not allow me to return until i've paid that debt off but because im over 18 now , its goes against me when i want to apply for financial aid, is there anything i can do? I was wondering if i could take out a student loan and pay that off?
ChristianJ194
over 1 year ago
All the other sites with more info are no longer available. Does this apply to loans taken out after 2006?
JonathanK237
over 1 year ago
Yes, we have loans (Stafford student loan and Parent Plus)...which are both fixed at 7.9%, I believe. I don't think we can do anything about the low 1.88% interest rate now.... but we can consolidate them in the future...when we get more loans. Does anyone know if we can get the lower rate??