http://tinyurl.com/mjk5c

Sorry, the source isn't the best but it was the only one I could find at the moment...

Quote :

"Interest rates on federally funded higher education loans are set to make one of their biggest increases. While tuition rates continue their upward climb, students and recent college graduates have a month to consolidate loans and avoid paying thousands of dollars more in interest. After lumbering along at 2.77 percent as recently as spring 2005, the interest rate on the popular Stafford loan will rise to 6.54 percent on July 1, the government said Tuesday. Interest rates on PLUS loans, which parents take out, will climb to 7.94 percent. ... ... Students, graduates and others repaying borrowings can largely avoid those higher costs if they consolidate their loans before July 1. That locks in their loan rate for the remaining payback period, rather than allowing it to float every year. ... ... Susan Ladd, director of the office of student financial planning at Drake University, said Tuesday that many students and parents look at higher education as an investment. She didn't think it would cause anyone to rethink plans. "It's a borrowing generation," Ladd said."

I heard about this on the radio. They said the reason behind the move was part of a reduce the deficit bill. The very next story was about how they spent a quarter of a million dollars looking for Hoffa.

5/31/2006 7:28:31 AM

we can spend a billion dollors on a plane to blow up iraqi civilians but we can't afford to educate our own people

5/31/2006 11:24:29 AM

Its a good thing I got my rate locked in

5/31/2006 3:39:45 PM

I was expecting some insignificant rise for people to bitch about, but 2.77 to 6.54 is a huge difference. That sucks for those who need them.

5/31/2006 4:06:58 PM

that was the in-school rate methinks - though a lot of people were/are able to consolidate at that rate permanently

the out of school rate was always higher

5/31/2006 4:25:42 PM

ahem

the rates go up

but so does the amount you can borrow

its a wash in the end

5/31/2006 4:41:57 PM

Quote :

"that was the in-school rate methinks - though a lot of people were/are able to consolidate at that rate permanently"

Folks still in school cannot consolidate their stafford loans.

5/31/2006 4:51:41 PM

so i guess i should consolidate

when you consolidate - if you go back to school do they still defer the payments?

5/31/2006 4:55:20 PM

locked in at 2.8%

my credit union gives me 7% on CDs

5/31/2006 5:20:33 PM

Quote :

"Folks still in school cannot consolidate their stafford loans."

I'm pretty sure you can, but you have to start paying the loan off.

5/31/2006 5:57:46 PM

What sucks about this is I don't think may students realized that the rate on their student loans was variable or at least they didn't beleive it would rise so rapidly.

A lot of people made decisions that were based on pretty much free money at 2-3%. Personally, I think it makes a lot more sense to use money to make student loans interest free rather than just giving it away in grants. Much more cost effective too. They should also expand student loan repayment for high need jobs like teaching, doctors in public clinics, military, social workers, and perhaps other high skill/low pay/poor working conditions gov't jobs.

5/31/2006 7:31:51 PM

Quote :

"Woodfoot: when you consolidate - if you go back to school do they still defer the payments?"

Depends on your lender, but most do. I consolidated my Stafford loans and have them back in deferrment until I finish

---

Quote :

"jbtilley: I heard about this on the radio. They said the reason behind the move was part of a reduce the deficit bill."

Partly right, partly not.

Previous Stafford loans -- those issued before June 1 2006 -- had variable APRs that used the 91-Day Treasury Bill rate (currently 4.72%) plus an added percentage of 1.7% when in-school or deferred, or 2.3% when in repayment. That puts the old loans at 7.02% for people in repayment as of June 1. The rates on these old Stafford loans had nothing to do with the deficit reduction bill and is the result of rising interest rates this past year.

However, all Stafford loans issues after June 1 2006 are fixed-rate loans at 6.80%. That was the result of the deficit reduction bill passed last year, which also increased the borrowing limits for freshmen and sophomores. 

5/31/2006 9:03:10 PM

Quote :

"I'm pretty sure you can, but you have to start paying the loan off."

I just looked this up, and I misread the N&O wrong. From what I'm seeing, I don't have to pay it off right now, but I do forfeit the grace period after I graduate.

5/31/2006 9:12:40 PM

Quote :

"I misread the N&O wrong"

uhhh

5/31/2006 9:15:39 PM

that's the best way to misread the N&O

5/31/2006 9:22:06 PM

Quote :

"From what I'm seeing, I don't have to pay it off right now, but I do forfeit the grace period after I graduate."

Right.

This is a pretty big deal for those of us in private schools, since people in our class are taking out $35k+ each year.

5/31/2006 9:24:11 PM

blah blah blah
to many folks getting degrees today
need to cut back so we have blue collar workers tomorrow
blah blah blah

5/31/2006 9:30:37 PM

so consolidate now - repay now

dont consolidate and repay in 6 months

anyone done the specific math to find out if you consolidate in oct/nov what the difference in $$ you'd be paying is? just kinda curious

5/31/2006 10:39:53 PM

yeah i was wondering how a lot of u guyrs were making this decision. i did the math for mine, and will save by consalidation ~$500 but will lose 4.5 months of grace period to find a job and shit.

6/13/2006 4:46:41 PM

instead of 6 months grace period u get 60 days

i consolidated mine a few weeks ago

6/13/2006 8:15:13 PM

is it worth it though

6/13/2006 10:04:53 PM

Sallie Mae has it so that of you get your application in by June 30 you lock in the lower rate before it increases and STILL get to keep your grace period. I like that.

6/13/2006 10:14:36 PM

My mom is 43 year old teacher with her masters and is still paying back her loans from college. That scares the hell outta me.

6/13/2006 11:15:33 PM

forgive the ignorance but do you have to have more then one loan to "consolidate" to a differate rate? For instance If I have one loan that the rate is high on with one company and I want to switch to another company for a lower rate is that possible???

6/13/2006 11:57:51 PM