Student Loan Consolidation Hot Topics

With graduation time right around the corner, we’ve had a lot of customers call in asking when to consolidate their federal student loans.
First of all, federal guidelines stipulate that you can not consolidate you loans while enrolled in school more then half time. However, that doesn’t mean you have to wait until you graduate to start the process. We recommend getting in touch with a consolidation lender before you graduate. This will afford you the time to get some of your questions answered, a quote for your lower monthly payment, and information about borrower benefits. While the application can not be signed and dated until AFTER you graduate, it doesn’t hurt to do your homework and get prepared now, ahead of time. What’s the rush you ask? Interest rates are expected to increase again on July 1, 2007 - so having your application signed and submitted after you graduate and before the rate increase will most likely be a tight squeeze. Additionally, because of the influx of student loan borrowers submitting applications this spring, processing times will be inevitably delayed.
As an added benefit, if you consolidate your loans during your grace period (6 month none payment period post graduation) you can lock in your interest rate .6% lower then if you wait until your loans go into repayment. Doing so does not require that you start making payments right away. Upon applying, you can request to have your application held for your grace period end date. Your application will have been signed and submitted long before your grace period ends, but your new consolidation lender will not start billing you until that date is reached.
Stay tuned over the next few weeks for more helpful information about the interest rate change this coming July. As always, your comments and suggestions are appreciated.

The federal government determines the interest rates for the Stafford Loan program. The rate is determined from when the loan is originated. Please see below for current interest rates for the Stafford loan

Stafford loans disbursed before July 1, 1998 have a variable interest rate that resets every July.

• Stafford loans in grace- 7.34%
• Stafford loans in repayment, deferment, or forbearance- 7.94%

Stafford loans disbursed between July 1, 1998 and June 30, 2006 have a variable interest rate that resets every July.

• Stafford loans in grace - 6.54%
• Stafford loans in repayment, deferment, or forbearance - 7.14%

Stafford loans disbursed on or after July 1, 2006 have a fixed interest rate of 6.8%

If you have questions about what your interest rate would be if you consolidated your Stafford Loans into a fixed interest rate loan please contact a Student Loan Network Advisors. We can research your loan history and estimate your consolidation interest rate for you.
The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans

Yesterday a student who is graduating May 2007 phoned in with questions on Bill HR 5 which is also known as the College Student Relief Act of 2007. His last year of school he borrowed a fixed interest rate Stafford Loan. Once he graduates he would like to consolidate his fixed interest rate Stafford loans with a previous consolidation that he did a few years back. His concern was that if the Bill HR 5 passed that his loan rates would never be able to go down with everyone else’s because he has already consolidated all of his student loans into one loan. He was simply confused on the full details of the bill and was looking for some clarification.
In a nutshell, IF this bills passes it will ONLY affect subsidized loans that are issued after 7/1/2007. Anything disbursed before this date will not be affected by the decrease of the interest rates. Personally, I believe that this bill is misleading the public to believe it helps ALL of the student loan borrowers—past and present. This bill does nothing for the current student loan borrowers who are heavily in debt. It will only help out the future students. This student is not the first to phone into the Student Loan Network looking for clarification of this bill nor will he be the last. So the answer is yes he can consolidate all of his student loans upon graduation and not have to worry if he made the wrong decision if this bill is passed.

The Student Loan Network: Stafford Federal Student Loans, Parent PLUS Loans, Student Loan Consolidation, Private Student Loans, Education Loans/College Loans