Student Loan Consolidation Protects Against July Interest Rate Hike

The passage of the Budget Reconciliation Act of 2005 heralds bad news for college graduates in 2006. The Act ushers in a record increase in student loan interest rates, forcing college students and college graduates to pay thousands of dollars more for student loans at a time when tuition has never been higher. However, recent graduates can consolidate their student loans today to insulate themselves from the rate increase.

Quincy, MA (PRWEB) January 5, 2006 -- The passage of the Budget Reconciliation Act of 2005 heralds bad news for college graduates in 2006. The Act ushers in a record increase in student loan interest rates, forcing college students and college graduates to pay thousands of dollars more for student loans at a time when tuition has never been higher. However, recent graduates can consolidate their student loans today to insulate themselves from the rate increase.

Federal Stafford loans, currently one of the most affordable federal student loans, will rise from interest rates as low as 4.7% (for students currently enrolled) to 6.8% on July 1, a 45% increase. Parents fare no better; the PLUS loan, currently a competitive 6.1%, will increase to 8.5% on July 1, a 39% increase. Loan consolidation allows students to lock in their current interest rates, preventing the July 1 increase from affecting them. Additionally, loan consolidation reduces the monthly payment and simplifies graduates' finances by combining all their student loan bills into one payment.

Jonathan Rudy, director of student loan consolidation at www.StudentLoanConsolidator.com, stated, "No other industry, even the red-hot real estate market, has seen such a double digit increase in rates in just one year. Families will likely find that paying for college without busting the budget will be harder than ever. Consolidating now will freeze graduates' interest rates, protecting them from this legislation."

The new legislation also prohibits students who are currently enrolled from consolidating, as well as prohibiting married couples from consolidating their loans together, and prohibiting students from consolidating more than once.

"The only viable option for students who want to protect themselves from this rate increase - excepting those who can repay their loans in full by July 1 - is student loan consolidation," said Mr. Rudy. "However, it's incredibly important that students and parents consolidate their loans now, as soon as possible, to ensure that their consolidation is completed no later than July 1."

Mr. Rudy encourages students, even those currently enrolled, to file a free application for student loan consolidation immediately. Parents with PLUS loans are also encouraged to file now. To file a free application for consolidation, students and families can visit www.StudentLoanConsolidator.com or call toll-free (877) 328-1565.

StudentLoanConsolidator.com is a service of the Edvisors Network, a multi-national education services company offering students options for managing the entire education life cycle, from getting into their college of choice to financing their education and beyond. The Edvisors Network is based in Quincy, Massachusetts and London, England. Visit them on the web at http://www.EdvisorsNetwork.com for more information.

Federal Student Loan Consolidation - Get Your Facts Straight Now!

If that is what it takes to improve your life, you should be proud you did it. Fortunately for all of us stuck with student loan debt there are federal student loan consolidation programs that can cut your student loan payments in half.

These programs will combine multiple loans into one loan which not only will save you money but it cuts out the hassle of multiple payment to multiple lenders.

Consolidation Backed By Federal Government

Federal student loan consolidation is backed by the federal government and allows you to extend your repayment terms.

If you have Stafford loans, you have a variable interest rate that adjusts annually. When you opt to consolidate, you get the choice to lock in at a low rate and there are many offers out there that will charge you no fees.

They want your business and you should shop around. There are many competing financial institutions that are competing for your money and that puts you in the drivers seat. You want to insist on the best possible deal on the market.

Consolidation Loans Federal Providers

Sallie Mae is a government institution that offers a 'Best Rate Promise.' They guarantee you that they will give you the 'lowest official student loan rates available to you' when you consolidate. If you have just graduated and your loans carry a variable rate you want to consolidate before your six month grace period ends.

If you consolidate your loans before the end of the six month grace period ends, many of you can lock in 6.625% or 6.75% interest rates.

If you put it off until after the grace period your rate will be more like 7.125% to 7.25%.These rates vary, so check them out carefully before you buy.

Consolidated Federal Loan Downsides

Federal student loan consolidation does have a downside. When you consolidate your loans, it lowers your payment by extending the amount of time you have to pay off the loan. With federal student loan consolidation you get to choose if you want a standard repayment in which your monthly payment for the life of the loan is fixed.

If you opt for graduated repayment your payments start low and increase at intervals specified by the lender.

There is also an income sensitive repayment in which your payment is determined by your income. This type of consolidation will increase as your income increases.

Watch Out For Minimum Payment Schedules

No matter what type of loan you choose the federal rules governing student loans set a minimum payment of fifty dollars. These rules are relaxed for the income sensitive repayment option. The most popular choice is the standard repayment. The payment always stays the same.

If you choose any loan beside the standard repayment, it does not mean you are locked in. You do have the option of changing your mind and applying for one of the other types of loans. The option may still be open but it depends on the terms of your loan.

You can always contact your lender for a full review of your options.

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