Student Loan Consolidation Gets Easier

[jeffrey]

One of the hassles for many of those trying to consolidate their student loans before interest rates rise on July 1 has been getting the information on who their student loan lender was. The rule had been that you had to consolidate your Federal student loan with the lender you originally received the loan from. An emergency spending bill signed recently by President Bush changes that rule so that those with Federal student loans can consolidate them with any lender.




Consolidation student loans can save students thousands of dollars in interest payments since beginning July 1, 2006 the interest rate on Federal student loans will change from their current variable rate to a fixed interest rate.

For example, Stafford loans will rise to 7.1% from the current 5.375%. Borrowers who consolidate loans they're already repaying can lock in this rate if they do so before July 1. For those that happen to be in their "grace period" (the six-month window between graduation and when they're required to start making payments on their student loans), they can lock in an interest rate of 4.75%.

The change should help those that haven't consolidated their student loans yet since their won't be any confusion on who can and can't issue the new loan. Since there are only a couple of weeks left to do this and the savings of doing so can mean thousands of dollars over the life of the loan, it should be a top priority of those that haven't consolidated their student loans yet.

[markio26]

wow!!! i hope that some ppl. locked this rate in and saved some money.....

[MarianneJ]

I had a consolidation loan (Sallie Mae) and a new SL since I am back in school (Wachovia) and I was able to consolidate them together into a new consolidation loan prior to July 1, so my rate for all of them is around 4.8% - not too bad. Plus, when SallieMae found out I was planning on consolidating with a different company they sweetened the deal - they will reduce my interest rate by 0.5% after 24 months instead of 36 months of on-time payments, and they are going to give me a 3% cash-back bonus after 12 months (which I will use to pay back the loans...I will try hard not to squander it)! )