June 7, 2006 == MEDIA ADVISORY
College students have just three weeks left to save big money on their student
loans.
Rates on federal education loans are set to rise significantly on July 1,
potentially adding thousands of dollars to the cost of college for many student
and parent borrowers.
The interest rate on Federal Direct or Stafford Loans - the most common type
of student loan - is expected to shoot up to 7.14% on July 1 from the current
5.3%. Student loans in "deferment" - those that don't yet need to be repaid
because the student is in school or in a postgraduate grace period - will rise
to 6.54%. The cost of federal parent loans for students, better known as PLUS
loans, will jump to 7.94%.
But these hikes can be avoided through loan consolidation, which essentially
turns a variable-rate loan into a fixed-rate loan under the federal student
loan program.
Calvin College director of financial aid Ed Kerestly says Calvin has been
communicating with parents and students about what they need to do now to save
money on their loans.
The potential for savings, he says, is dramatic.
"The good news," says Kerestly, "is that students can consolidate their
federal student loans now, either a single loan or multiple loans. And they
can lock into a low interest rate."
A typical recent graduate with $20,000 in debt can consolidate now at 4.75
percent interest for a monthly payment of
$129. Waiting until July 1 to consolidate at 6.625 percent interest would cost
$22 more a month, or an extra $5,123 over the 20-year life of the loan.
More than 90% of Calvin students receive some form of financial assistance and
every year Calvin awards more than $46 million in merit-based and need-based
scholarships, grants, loans, work-study, and other awards.
Contact Ed Kerestly at 616-526-6137
WEB RESOURCES
*Education Department ... http://www.ed.gov
*Loan Consolidation website ... http://www.loanconsolidation.ed.gov
*Student Financial Aid Administrators ...
http://www.nasfaa.org/publications/2006/eainterestrates060106.html
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Received on Wed Jun 7 09:33:47 2006
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