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Student loan borrowers in less than three weeks will come face to face with new legislation changing rules and regulations and increasing interest rates affecting federal student loans. Most notable is that federal student loan interest rates on July 1, 2006 will increase 1.84 percentage points, the second-largest interest rate hike in the history of the program.
Upon the news of the rate increase, announced at the May 30, 2006 auction of 91-day Treasury bills, student borrowers have been rushing to find the best consolidation rates for their loans.
According to NextStudent, the premier education funding company based in Phoenix, student loan consolidation, especially now before July 1, helps borrowers combine their numerous loans into one and offers one low interest rate. Along with NextStudent’s low interest rates, its reputation for top-quality, personalized service is unsurpassed within the industry of student loans.
In-School Consolidation Available
Student loan borrowers should be aware that between now and July 1, 2006 the U.S. Department of Education is allowing for in-school consolidation, at the discretion of the original lender. After July 1 in-school consolidation no longer will be available. Although there are three or four lenders who do not partake in the process, NextStudent is among the lenders that actively help current students consolidate their student loans, a process whereby the original lender releases loans to other lenders and allows borrowers to consolidate.
NextStudent now offers an in-school consolidation fixed rate that most often is available at 4.7 percent, and can be as low as 2.5 percent in some cases. After July 1 the in-school consolidation fixed rate can go as high as 7.25 percent.
Allay Fears about In-School Consolidation
Many students have unwarranted fears regarding in-school consolidation. Through the program student borrowers must sign a waiver to give up their grace period – the six-month time frame following graduation that allows for deferment of student loans. The waiver then puts the in-school loans into an immediate repayment status. The biggest fear of students is they think they have to make payments while they are in school.
However, it is important to understand the actual facts regarding in-school consolidation. Following the completion of an in-school consolidation, which takes up to six weeks, a student borrower’s loans revert back to an in-school deferment; therefore, payments do not have to be made until after graduation. An added benefit is that borrowers who graduate have up to six years to defer their payment.
Along with the expected in-school consolidation interest rate hikes taking effect July 1, other interest rates also will increase. Stafford loans disbursed on or after July 1, 2006 will have a new fixed rate of 6.8 percent. PLUS loans disbursed on or after July 1, 2006 will have a new fixed rate of 8.5 percent.
NextStudent Offers Other Low Rates
NextStudent offers other low consolidation rates to borrowers who consolidate before the July 1, 2006 deadline. A 2.5 percent interest rate is available to eligible borrowers, with applied benefits, including .60 percent reduction for students who consolidate after graduation; a .25 percent reduction for borrowers who use Auto Debit; and an added 1 percent reduction for students who make 36 consecutive on-time payments.
Through the consolidation program interest rates are locked for the loan’s life, payment terms can be extended and thousands saved over the long term. NextStudent offers aggressive discounts and benefits while it brings to students a long-established reputation as a company specifically geared toward borrowers’ needs.
With less than three weeks remaining for all consolidations at low interest rates, it is important to rein in outstanding student loans with high interest rates to receive the best possible rate available, according to NextStudent. After July 1, students no longer will be able to receive the low rates now available.
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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