Student Loan Consolidation. Don't Procrastinate.
Perhaps you were the student who waited until the last minute to
cram for finals or routinely rolled out of bed five minutes
before morning classes began. Procrastination is a common part
of many students' college experience. However, putting off
consolidating your student loans and locking in the current
interest rate won't harm your grade point average, but it will
affect your financial future. If you are thinking about
student loan consolidation, you have until the
deadline of June 30, 2006 to take advantage of the current low
With interest rates expected to increase from 4.7% to 6.8% on
July 1st, not consolidating your student loans could be a big
mistake that will cost you thousands of dollars. For example, if
you currently owe $30,000 in Federal Stafford Loans, monthly
payments are $314. This amount can drop to $217 if you do a loan
consolidation with the current interest rate. If you don't meet
the deadline, you will soon be paying $345 a month. Wouldn't you
prefer to be doing something else with $128 every month? As
well, parents who are currently paying on PLUS loans should
expect a hefty increase to what they are paying in interest if
they don't lock in the current rate before the deadline.
Besides the annual adjustment to the student loan interest
rates, sweeping changes to the terms of financial aid are due to
take affect on July 1st as part of the U.S. Congress' Budget
Reconciliation Act, and most of these changes will not benefit
borrowers. Among the changes, students in school will not be
able to consolidate their loans. As well, loan origination fees
for students will be doubling, and the "in school" interest rate
that currently gives students attending classes or in their
grace period a discount of .6% will be discontinued.
Another reason not to delay in consolidating student loans is
that there may not be an amnesty period for borrowers who fill
out applications that aren't processed by the deadline. Last
year, a flood of applications were received the day before the
rate hike went into affect, and the U.S. Department of Education
generously offered amnesty for those who had submitted completed
applications prior to the deadline. This year the Department of
Education might not be so kind, and applicants who haven't
completed their consolidations before July 1st could be faced
with having to pay the higher interest rate. Because student
loan applications can take anywhere from one to 4 months to be
processed, the time to submit an application is now.
The good news is that if you are considering a
student loan consolidation, you still have enough
time to complete the process and take advantage of the current
interest rates and terms. It only takes a matter of minutes to
fill out an application, and there is lots of help available.
So, go ahead and get started, and pat yourself on the back for
taking charge of your financial future.