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The passing of the Deficit Reduction Act of 2005 in February brought with it major cuts to the federal student loan program. Along with cuts to other federal programs such as Medicare, Medicaid and food stamps, the student loan program was hit hardest, with a whopping $12 million in cuts.
In addition, legislation instituted and set to take effect on July 1 will negatively impact student loan consolidation, which will prove to be a thorn in the sides of students throughout the country.
NextStudent’s Low Consolidation Rates
Borrowers who currently are in school now can lock in student loan consolidation rates at 4.75 percent, thereby preventing their federal rates from increasing before the July 1 deadline, according to Phoenix-based NextStudent, an education funding company.
NextStudent also offers a 2.5 percent fixed rate, with benefits applied, whereby eligible borrowers can consolidate student loans and reduce their payments by as much as 70 percent.
Locking in now at a low rate is a smart idea for both students and graduates. Along with a lower student loan consolidation rate, borrowers can receive incentives such as one easy monthly payment, no prepayment penalties and a longer payment term.
Consolidate Before July 1 Change
Other stipulations concerning student loan consolidation are important to note, as the July 1 effective date is just a couple months away. Borrowers should be aware of other regulations set to be instituted before rates skyrocket and student loan consolidation becomes more difficult.
Student loan consolidation will retain the single holder rule. If one FFELP lender holds all of a borrower’s loans, that lender has the right to refuse to release the loans to another company. NextStudent’s low 2.5 percent student loan consolidation rate for qualified borrowers may not be offered through various lenders, so it is important to act now before the interest rate increase.
The new legislation will eliminate spousal consolidation, whereas borrowers no longer will have the option to jointly consolidate with their spouse.
In-school student loan consolidation will be eliminated; therefore, if a borrower is in school, that borrower will be unable to consolidate until he drops below six credits.
NextStudent’s Student Loan Consolidation Benefits
NextStudent’s student loan consolidation is a free government program with no fees and no costs. Other benefits include: one-minute eligibility determination; reduced or postponed monthly payments; and the prevention of interest rate hikes.
With a long list of regulations set to negatively turn around student loan consolidation, student borrowers now can take advantage of rates they may not see after July 1.
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 Loan Consolidation.
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