STUDENT LOAN INTEREST RATES SET TO INCREASE JULY 1ST Washington, D.C. - United States Representative Vic Snyder suggested today that persons with outstanding student loans may want to consider consolidating them before July 1st, when interest rates are set to increase. “Student loan consolidation may be a smart financial move,” said Congressman Snyder. “But, if you determine that it's right for you, you should act fast. Interest rates are set to increase July 1st of this year.” Beginning July 1, the new Stafford variable rate will increase from 2.77% to 4.7% for those still in school or in their six-month grace period, and 5.3% for those in the repayment phase. Student loans must be consolidated by June 30 of this year to get the current low rates. When student loans are consolidated, loans are paid in full in return for a single loan for the combined balances. The new loan will typically have a lower interest rate that is fixed for the life of the loan. According to Sallie Mae, the leading provider of student loans, consolidation could reduce your monthly payments by up to 58 percent. However, these savings are achieved in part by extending repayment terms. If a person chooses to extend a repayment term, it will take longer to pay off overall debt and the total interest expense will be higher. If a person thinks that loan consolidation is right for them, a consolidated loan can be obtained from any bank or credit union participating in the Federal Family Education Loan Program, or directly from the U.S. Department of Education at http://www.loanconsolidation.ed.gov. -30- |