Consolidating Student Loans
On July 1, 2008 the
interest rates on outstanding federal student loans are 6.8
percent—the highest rate in six years—and the rate on outstanding
federal parent loans 8.5 percent.
Student borrowers who
consolidate before July 1st may be eligible to lock in a rate as low
as 4.75 percent over the life of their loan(s)—which would save the
typical undergraduate borrower almost $3,500 over the life of his or
her loan. But students and parents must act quickly to ensure that
they can lock in these lower rates.
The day you enter
repayment the interest rates of your student loans increase 0.6%. If
you apply for your Federal Consolidation Loan before the end of your
grace period your new loan will be based on your discounted interest
rate. Submit your application as soon as possible.
Some lenders will reduce your interest rate by an additional
quarter-point if you agree to have monthly payments automatically
deducted from your checking or savings account.