Phoenix, AZ (PRWEB) February 2, 2006
Federal Student Loan Solutions has been closely following the proposed changes by Congress to the Federal Student Loan Program. As part of the 40 billion dollar Deficit Reduction Act of 2005, a congressional budget reduction plan is expected to be signed into law in a few days which will cut 13 billion dollars from the student loan program. These cuts will cost student and parent borrowers more in the form of fewer subsidies of the interest costs associated with repaying the loans taken out for college.
Most importantly, Stafford loan rates on new loans disbursed after July 1, 2006 will go up to a fixed rate of 6.8% (a significant change from the current variable rate of 4.7%) and Parent PLUS Loan rates will go up to a fixed rate of 8.5% (up from the current 6.1% variable rate). All Stafford and Parent PLUS Loans disbursed after July 1st will remain fixed at the higher rates for the duration of the loan and will never be as low as they are today.
Positive news within the program is the elimination of the 3% origination fee charged on federally backed Stafford and Parent PLUS Loans, making these programs more cost effective for borrowers. The origination fee will be eliminated over the next four years. In addition, the extension of the Parent PLUS Loan program to graduate students will allow an additional period of support for some students.
Federal Student Loan Solutions suggests that student loan borrowers take the following actions now to avoid paying higher than necessary costs for their student loans.
1. If you have already graduated and have not consolidated your loans, do so immediately by calling 1-888-347-8833 to lock in this year’s lower rates. If you have already consolidated your federal student loans you may be eligible to do so again, in some circumstances, and take discounts on your current interest rates (saving you hundreds, if not thousands, of dollars) and restore some exhausted benefits. This will need to be done before July 1, 2006 as “reconsolidation” will be prevented under the new rules.
2. If you are currently enrolled in school, contact your existing lender immediately and request “in-school” consolidation. This will lock your existing low rate on that portion of your loans avoiding the expected higher interest rates, saving hundreds, if not thousands, of dollars in interest. The consolidated loan will be placed back into “in-school” deferment while you finish school and no payment will be necessary. Again, this will need to be done well before July 1, 2006 as in-school consolidation will be eliminated under the new rules.
3. If married, and both husband and wife have federal student loans, explore joint/spousal consolidation. This may benefit you both with discounts, lower payments and ease of a single payment. The three “D’s” (death, divorce and deferment) as problems with joint consolidation no longer exist. However this portion of the Federal program will be eliminated, as well, after July 1st, 2006.
Daniel Rivera, President of Federal Student Loan Solutions and an industry veteran, reported that the budget reduction plan involving the Federal Student Loan program would have dramatic effects on students and parents of students utilizing the program. Mr. Rivera added, “The short term effect of these changes will result in higher costs for students trying to pay for college, the long term effects of this bill are at this point uncertain.” Mr. Rivera advises students, parents of students and former students with student loans to contact his company at 1-888-347-8833 for further information and updates on changes to the program.
About Federal Student Loan Solutions:
Federal Student Loan Solutions is an authority in student loans and can guide parents and students through the frequently confusing route to securing both federal and private education loans. Federal Student Loan Solutions offers the opportunity to have a personal advisor with a vested interest in helping you manage your education loan portfolio. For more information visit http://www.fsls.net or call 1-888-347-8833.
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