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Mattyk 06-04-2005 06:59 PM

If you are a college student with loans, you better read this
 
Huge interest rate hike coming up soon, better lock in now

[url="http://www.billingsgazette.com/index.php?id=1&display=rednews/2005/06/04/build/business/55-student-loans.inc"]http://www.billingsgazette.com/index.php?id=1&display=rednews/2005/06/04/build/business/55-student-loans.inc[/url]

Students have till June 30 to lock in loan rates
[b]By ALDO SVALDI
Knight Ridder News [/b]

DENVER, Colo. - Michael Rivera owes nearly $30,000 in student loans and has a year left before graduation.

"When I got these loans, I thought the interest rate at the beginning was going to be the rate I had forever," said Rivera, a student at the University of Colorado at Denver.

He plans to save thousands of dollars by consolidating his various loans with one lender before July 1.

Stafford Loans, used by students, and Parent Loans for Undergraduate Students carry a variable interest rate that adjusts July 1 every year.

Borrowers have until June 30 to consolidate and lock in current rates, in the process sidestepping the steepest increases in the 40-year history of the federal student-loan program.

Sallie Mae, the nation's largest student-loan provider, expects rates on Stafford loans in repayment to increase from the current 3.37 percent to 5.3 percent.

Rates for students such as Rivera who consolidate while in school, or in their six-month "grace period" for repayments, will increase from 2.77 percent to 4.7 percent.

Rates on PLUS loans are expected to go from 4.17 percent to 6.1 percent.

For Rivera, consolidating now rather than after graduation could potentially save him $600 a year in interest costs.

The U.S. Department of Education is expected to confirm those interest rates later this week, said Sallie Mae spokeswoman Erin Korsvall.

"The one thing we know with certainty is that rates will go up in 30 days," said Mark Brenner, president of College Loan Corp.

Many borrowers remain unaware they have to apply to consolidate their loans or of the looming deadline for doing so, Brenner said.

Borrowers with a single lender must apply with that lender for a consolidation first, while those with more than one lender can shop around.

Depending on the lender, consolidation applications can be made over the phone, online or in writing.

Besides locking in a fixed rate, consolidating student loans can stretch out the repayment terms from 10 years to up to 30 years, depending on the size of the loan.

With federal rules setting rates and repayment terms, lenders differentiate themselves by the "benefits" they offer.

Many lenders offer a 0.25 percentage-point discount on interest rates for automatic payment deductions.

Lenders also typically offer discounts for timely payments but can differ in how they do it.

College Loan provides a cash rebate worth 1 percent of the loan balance for borrowers who make their first nine payments on time, Brenner said.

Minneapolis-based U.S. Bank, in contrast, lowers the loan interest rate by 1 percentage point after 36 timely payments, said Russ Kruse, manager of student banking.

Lenders shouldn't charge a fee for loan consolidations, Brenner said. But lenders do make their money in other ways.

For one, the loans are guaranteed against default by the federal government, which also covers the gap between the variable interest rate in place and the fixed rate that borrowers lock in, Kruse said.

Bankers also see the loans as a way to attract new customers and establish a long-term banking relationship, he said.

Before consolidating, borrowers should consider the payment amount they can reasonably afford and gather information on all their loans and who provided them.

For more information, they can contact their current student loan providers or visit [url]www.loanconsolidation.ed.gov[/url].

That Guy 06-04-2005 08:58 PM

Re: If you are a college studen with loans, you better read this
 
wow, guess they're finally reacting to the gov rate increases etc or greed... that's a huge jump.

Gmanc711 06-04-2005 09:17 PM

Re: If you are a college studen with loans, you better read this
 
Thanks for that post. I'm taking a loan out over the summer; and I will now make sure I do it asap.

skinsguy 06-07-2005 06:20 PM

Re: If you are a college studen with loans, you better read this
 
Yippie! I will start paying back about $11,000 in student loans....no tellings how much I'll have to pay back by the time it's paid in full! Just hope someone wants to hire me in at $30 an hour!

Mattyk 06-07-2005 07:35 PM

Re: If you are a college studen with loans, you better read this
 
I wish I only had $11k. I don't even think about how much I'm going to owe when I'm done. It's too depressing. :(

TheMalcolmConnection 06-07-2005 07:47 PM

Re: If you are a college studen with loans, you better read this
 
Thank God for scholarships!

skinsguy 06-07-2005 07:56 PM

Re: If you are a college studen with loans, you better read this
 
[QUOTE=Mattyk72]I wish I only had $11k. I don't even think about how much I'm going to owe when I'm done. It's too depressing. :([/QUOTE]


Well, you're going for your Master's degree aren't you? That is more expensive anyway! My fiance' and I were talking about getting a house instead of spending money on an apartment. However, I would love to have that loan paid off, because she is going to have student loans to pay back herself plus a car payment.

It's funny how we go to college to earn more money but we seem to be earning more debt than money! Heck, where I live, jobs are few and far between. I'm over-qualified for many of the jobs around here and when a good job is offered, you have everybody in the county and city gunning for that job, because they're working at some $8 an hour job already.

Now that's depressing! I am thinking that I need to open a technology business around here in order to work in the IT field!

Riggo44 06-07-2005 08:02 PM

Re: If you are a college studen with loans, you better read this
 
Gulp! :eek: Thanks for the tip Matty.

Sheriff Gonna Getcha 06-07-2005 08:30 PM

Re: If you are a college studen with loans, you better read this
 
Hey Matty,

Are an TA-ships available? I know my friends at Cornell U. paid their way through grad school via TA-ships and by acting as research assistants. Unfortunately for me, law schools rarely (if ever) offer such TA positions - leaving me with a bulging, fat bill.

Mattyk 06-08-2005 09:07 AM

Re: If you are a college studen with loans, you better read this
 
Yeah I'm going for my masters which is definitely pretty expensive, especially at a private school.

The payoff should be there in the long run. I don't regret going back to school, once I got out of my partying days I've actually found school to be pretty interesting and enjoyable. A lot of work for sure but it's a great challenge.

I need to find a Federal job that will pay back some of my loans for me!

skinsguy 06-08-2005 09:57 AM

Re: If you are a college studen with loans, you better read this
 
[QUOTE=Mattyk72]Yeah I'm going for my masters which is definitely pretty expensive, especially at a private school.

The payoff should be there in the long run. I don't regret going back to school, once I got out of my partying days I've actually found school to be pretty interesting and enjoyable. A lot of work for sure but it's a great challenge.

I need to find a Federal job that will pay back some of my loans for me![/QUOTE]


Well, getting a bachelor's from a private school isn't cheap either, so I understand completely of the expense! I'm sure you are in a better area than I am to where it is going to pay off quickly. Finding a career where I live is like banging your head against the wall. :banghead:

cpayne5 06-08-2005 10:41 AM

Re: If you are a college studen with loans, you better read this
 
I had $0 saved up for college when I graduated HS. Four years and one Bachelor's degree later, I have a college debt totaling $0. I completed 1/3 of a Master's, too. My employer is going to pay for the rest of my master's when I decide to go ahead and finish it.

skinsguy 06-08-2005 03:14 PM

Re: If you are a college studen with loans, you better read this
 
[QUOTE=cpayne5]I had $0 saved up for college when I graduated HS. Four years and one Bachelor's degree later, I have a college debt totaling $0. I completed 1/3 of a Master's, too. My employer is going to pay for the rest of my master's when I decide to go ahead and finish it.[/QUOTE]


You're very lucky with that! I am hoping maybe I can find an employer who is willing to help pay for my Master's. Right now...the hardest thing is finding an employer in general.


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