KCCI.com
05-31-06
1 Month Left For Students To Consolidate Loans, Pay Higher Interest Rates
ISU Helping Students Learn About Loan Changes
AMES, Iowa -- College students have one month to consolidate student loans
before a interest rate increase takes effect on July 1.
Interest rates on federal student loans will see a near historic increase on July 1,
according to a news release from College Loan Corp. The average student loan
borrower can save more than $3,245 by locking in low interest rates. The new,
higher rates were released by the U.S. Department of Education. Stafford Loan
interest rates will rise 1.84 percent to 7.14 percent, while PLUS Loans for parents
will rise 1.84 percent to 7.94 percent.
Before the spring semester ended at Iowa State University, the school sent
students a notice encouraging them to beware that their student loan interest
rates were going to go up.
"We're definitely on the upswing here, and that's why we're trying to encourage
all of our students to take advantage of the consolidation opportunities now so
that they can keep their loans at a lower rate," said ISU's Roberta Johnson.
Student Andy Slattery wasn't planning on consolidating his loans until he finished
his thesis in August. He was relieved to get the reminder.
"It's pretty much the last thing on my mind right now. I'm just focusing on getting
that stuff done, even if it was in the paper or something, I probably would have
overlooked it because I'm not even concerned with that right now," Slattery said.
Slattery said he is now considering consolidating before the July 1 deadline to
avoid an increase in his rates.
"I'd like to save money just as much as anybody else would, especially when you
graduate, you're not going to be making the most money in the beginning, so any
little bit helps," Slattery said.
Johnson encourages students to check out the Web site FinAid.org. There they
can calculate how much they could save by consolidating. For example, a
student with $20,000 in loans would save about $2,200 over a 10-year period.
"I could find lots of more fun things to do with $2,200 than make loan payments,"
Johnson said.
Even if a recent grad must give up the six-month grace period in order to
consolidate, Johnson said it's worth it.
"Long term, trying to determine whether the six-month is a greater benefit or the
lower interest rate is of the greater benefit, it's probably going to wash out to be
cheaper for the student to have locked in at the lower interest rate," Johnson
said.
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