Student loan rates dropping
June 9, 2008, 10:34 am
Filed under: College, Money Basics

Thanks to the failing economy, as of July 1st, federal student loan interest rates will drop over three percentage points. This will be the biggest one year drop in the Stafford loan program’s history. For Stafford loans in the grace period, rates will be 3.61% and for Stafford loans in repayment, rates will be 4.21%. For those of us with multiple student loans, now would be a great time to consolidate.

I have my student loans through Sallie Mae, who, interestingly enough, has stopped their federal consolidation program. I guess they feel like they would lose too much money if they continued to offer the program through this economic rough patch. The government’s Federal Direct Consolidation Loan program, however, is still going strong.

Three of my loans are at 6.8% and the other two are at 4.875%, so reconsolidating them would save me a good chunk of change over the life of the loans. I need to look into the Federal Direct program a bit more closely to see how my monthly payment would change and if they offer payment options.

Are you planning to consolidate your student loans?

3 Comments so far
Leave a comment

Great info…keep it comming

Comment by Natteng

We have pretty good terms for our loans, so it won’t help us to consolidate. I’m down to $1100 on mine (from $5800 at the beginning of the year – woohoo!!), but I have a 2% rate reduction for having made 48 months worth of payments. It actually counted the amount of money that equals 48 payments, rather than 48 actual months. So when the rate goes down, mine will go down even more. My husband finished medical school last year, so he has a HUGE amount of loans. But through his lender, the interest rate drops to 0% after 3 years of on time payments, but he loses that if he consolidates. For us, even if it meant locking in a lower rate, we’d still do better to leave it where it is. So I would advise everyone to double check the terms of your loan and make sure you’ll really be better off consolidating.

Comment by Sarah

Great points, Sarah. You definitely have to consider all of the perks your current loans have compared to what, if any, perks you’ll get after consolidating.

Comment by Sarah

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