Student-loan rates set to rise
excerpts from the article:
Blissfully low rates on federally guaranteed education loans - including Stafford and Parent Loans for Undergraduate Students (PLUS) - may be about to disappear. But borrowers could get some relief if they consolidate their loans by the end of June.
By July 1, rates, which have been at a historic low of 2.78 percent, could go up by as much as 2percent. On a $20,000 loan to be repaid over 10 years, students could pay $2,000 more in interest.
Federal student-loan rates are adjusted every July 1 and are based on rates for short-term Treasury bills.
"We don't know yet what the rate will be, but according to estimates, it looks like it will go up 2 percentage points," said Martha Holler, spokeswoman with Sallie Mae, which provides education funding and owns and manages student loans for more than 7million borrowers.
But students can avoid having to pay those higher rates, say Sallie Mae officials, if they consolidate their loans by June 30. A consolidation loan allows a borrower to roll over variable-rate loans into one fixed-rate loan to avoid future rate hikes. The loans would also extend the payment schedule from 10 years to 20 or 30 years, meaning the interest would be more, but monthly payments would be less.
Students who have just graduated can lock in a rate of 2.875 percent during their grace period - the six-month time period between their graduation and the time they are required to start making payments. And those who have been making payments can lock in a rate of 3.375 percent to be repaid over 20 years.
excerpts from the article:
Blissfully low rates on federally guaranteed education loans - including Stafford and Parent Loans for Undergraduate Students (PLUS) - may be about to disappear. But borrowers could get some relief if they consolidate their loans by the end of June.
By July 1, rates, which have been at a historic low of 2.78 percent, could go up by as much as 2percent. On a $20,000 loan to be repaid over 10 years, students could pay $2,000 more in interest.
Federal student-loan rates are adjusted every July 1 and are based on rates for short-term Treasury bills.
"We don't know yet what the rate will be, but according to estimates, it looks like it will go up 2 percentage points," said Martha Holler, spokeswoman with Sallie Mae, which provides education funding and owns and manages student loans for more than 7million borrowers.
But students can avoid having to pay those higher rates, say Sallie Mae officials, if they consolidate their loans by June 30. A consolidation loan allows a borrower to roll over variable-rate loans into one fixed-rate loan to avoid future rate hikes. The loans would also extend the payment schedule from 10 years to 20 or 30 years, meaning the interest would be more, but monthly payments would be less.
Students who have just graduated can lock in a rate of 2.875 percent during their grace period - the six-month time period between their graduation and the time they are required to start making payments. And those who have been making payments can lock in a rate of 3.375 percent to be repaid over 20 years.
