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After weeks of speculation about the upcoming expected interest rate increases, student borrowers now know that their federal student loan rates will jump 1.84 percentage points on July 1, 2006, less than five weeks away.
The interest rate increase announcement is based on the May 30, 2006 auction of 91-Day Treasury Bills. The rate increase is the second largest in the student loan program’s history.
Only Five Weeks Remaining Until Rate Increase
With less than five weeks away and the forthcoming interest rate hikes, it is more important than ever that student borrowers consolidate their federal student loans before July 1, 2006, according to NextStudent, the Phoenix-based premier education funding company.
Student borrowers should take note that for Stafford loans disbursed on or after July 1, 2006, the new rates will be fixed at 6.8 percent. PLUS loans disbursed on or after July 1, 2006 will be fixed at 8.5 percent. By consolidating before July 1, students can avoid the interest rate hikes and lock in a low, fixed interest rate for the life of the loan.
The interest rate changes were incorporated into the recently passed Deficit Reduction Act of 2005, S. 1932, which was signed into law Feb. 8 by President Bush. The legislation cut a total of $12.7 billion to the federal student loan program.
NextStudent Offers Low Rates, Personalized Service
NextStudent’s federal student loan consolidation program is free and there are no hidden charges or fees and no prepayment penalties. The company offers low interest rates coupled with first-rate personalized customer service. Information on borrowers is completely secure and confidential.
With consolidation, all of a student borrower’s loans are combined together, adding up to one easy monthly payment. NextStudent features a 2.5 percent interest rate with benefits applied, which include .60 percent rate reduction for consolidating after graduation; .25 percent rate reduction when students use Auto Debit, and a 1 percent reduction when student borrowers make 36 consecutive on-time payments. A 4.75 percent interest rate is available for eligible in-school borrowers.
There still is time before the July 1 deadline to consolidate and save money with a new low interest rate. Student borrowers also can extend their payment period and save money over the long term. By saving through consolidation student borrowers can put the extra funds into the other important things in their lives.
College Costs on the Rise
The cost of college increases every day, making it much more difficult for students to obtain their dream of a higher education, especially for those students from low-income and middle-income families. However, consolidation can be the answer for students who want a lower interest rate and easier monthly payments.
July 1 is just around the corner, so now is the time for students to consolidate if they want to help ease their monthly financial burden and save money over the long term.
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 Loans.
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