Take Advantage of Student Loan Consolidation Before Rates Rise 1.84 Percentage Points on July 1
The interest rate increase on federal student loans (http://www.nextstudent.com/privateloans/privateloans.asp) will increase 1.84 percentage points on July 1 and is based on the announcement of the May 30, 2006 auction of 91-Day Treasury Bills.
In less than five weeks students will be subjected to the second largest rate increase in the history of the federal student loan program. With the upcoming rate hike, student borrowers are in the perfect position to consolidate their loans and lock in a low rate before the deadline, according to NextStudent, a premier education funding company based in Phoenix.
The interest rate increase and other changes to rules in the federal student loan program are due to the passing this past February of the Deficit Reduction Act of 2005, S. 1932, which was signed into law by President Bush. Along with major cuts to various federal programs, the legislation cut .7 billion to the federal student loan program.
Stafford and PLUS Loans Affected
Student borrowers who are not convinced that consolidation is a smart choice should note the upcoming changes on Stafford and PLUS loans. New rates for Stafford loans disbursed on or after July 1, 2006 will be set at 6.8 percent. For PLUS loans disbursed on or after July 1, 2006 the fixed rate will be 8.5 percent. However, if student borrowers take advantage of consolidation before July 1, they can lock in a low interest rate that stays fixed for the loan's term. Borrowers also can extend their payment term.
July 1 is less than five weeks away so there is not that much time for students to make their financial situations easier. Consolidation bundles together all of a student's loans to make one simple monthly payment. Instead of numerous student loan bills, students more easily can manage one monthly payment with one low interest rate.
NextStudent's Consolidation Rates
Consolidation offerings through NextStudent include a 4.75 percent rate for qualified in-school borrowers. Also available is a 2.75 percent interest rate for qualified borrowers when benefits are applied. Benefits include:
• .60 percent reduction for students who consolidate after graduation
• .25 percent reduction for using Auto Debit
• 1 percent reduction after 36 consecutive on-time payments
Consolidation is a free government program. Through NextStudent there are no fees, charges or prepayment penalties when borrowers consolidate, and all borrower information is fully secure and confidential. Borrowers receive low rates and one-on-one service with a personally assigned education finance adviser.
Heavy Burden for Students
The rising cost of a college education coupled with the interest rate increase will make it more problematic for those students who want to receive a degree. Those hardest hit will be from low-income and middle-income families who oftentimes are denied or deny themselves a college education due to the high cost.
Consolidation can help students who have college loans (http://www.nextstudent.com/privateloans/privateloans.asp) with high interest rates and numerous monthly student loan bills. One monthly payment with a lower interest rate and extended payment term can be the first step to helping students ease their financial burdens. However, it is important to take the first step by consolidating before the July 1 deadline, which is just weeks away.
NextStudent believes that getting an education is the best investment you can make, and it is dedicated to helping you pursue your education dreams by making college funding as easy as possible. Learn more about Student Loan Consolidation (http://www.nextstudent.com) at http://www.nextstudent.com/.
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