San Diego, CA (PRWEB) May 16, 2006
On July 1, interest rates for student loans are expected to increase up to 40%. Students with a debt of $20,000 could pay as much as $4,900 more over the life of their loans in a 20 year period. The rates are based on the 91-day T-bill auction that occurs each May. Based on today’s current T-bill auction, rates will jump as much as 2%.
Student’s who consolidate while in their grace period and prior to July 1, may receive a fixed rate as low as 4.75%. For students who are already in repayment, they may receive a rate as low as 5.375%. Current student loans are at a variable rate until consolidated and have an 8.25% cap.
“Based on the current T-bill rates, students who wait to consolidate until they are in repayment and after July 1 will be facing increased rates over 7%” according to Mary Montiel of Collegiate Funding in San Diego CA http://www.collegiatefunding.com “Many times students wait until their six month grace period is up, but this year that will be a costly mistake”
By acting fast a student may be able to receive a fixed rate as low as 4.75%. “These are low rates that we may never see again, and time is running out” says Mary Montiel. Parents who have used the Federal Plus program, the parent loan for undergraduate students, are facing the same increases. Such student loans are variable and adjust every July 1. The rate is fixed based on the weighted average of the loans once consolidated. Current Plus rates are 6.1% but could increase to 8% or higher.
Some lenders offer incentives that further reduce the fixed rate. "Our incentive plan can reduce the interest rate as low as 3.5%. Borrowers are given an additional 1% reduction after making 36 on time payments and an immediate 1/4% reduction for automatic withdrawal” says Mary Montiel of Collegiate Funding.
This comes just after the Deficit Reduction Act passed earlier this year. The Deficit Reduction Act raises all new student loans disbursed after July 1, 2006 to a fixed interest rate of 6.8% and Parent Plus loans to 8.5%. Additionally, it no longer allows a student in school to consolidate their loans. Students and parents with loans are urged to consolidate today.
For more information on student loan consolidation contact Collegiate Funding at http://www.collegiatefunding.com or call 1-800-918-7587.