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June 4th, 2009

Attention Those With Variable-Rate Fed. Student Loans

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Here’s your chance to save thousands: after July 1 you’ll have the opportunity to consolidate your variable-rate Federal student loans into one new consolidated loan. Experts are predicting that when interest rates change on July 1, they will fall to historic lows. Unfortunately, only first-time consolidators can take advantage of these new low rates:

Interest rates on federal consolidation loans are capped — that means they can never go higher than 8.25%. But, there’s no guarantee that they’ll ever be this low again. In fact, the 2009-10 rates, are the lowest interest rates in the history of the federal student loan program. The previous low was in 2004-05 when in-school/grace period rates on the Stafford loan hit 2.77%.

• Stafford Loan Consolidation (In-School/Grace Period): 2.00%
• Stafford Loan Consolidation (Repayment Period): 2.50%
PLUS Loan Consolidation: 3.38%

Be sure to visit www.loanconsolidation.ed.gov/ to learn more about student loan consolidation.

While these historically-low rates may not be too good to be true, there are a set of “exceptions and caveats” that will exclude some from the program. For example:

  • Borrowers with loans originated after July 1, 2006 are not eligible for the new lower rate.
  • Private student loans cannot be included in a federal consolidation loan.
  • Borrowers who are still in school cannot consolidate their loans until they graduate, as Congress repealed the early repayment status loophole in 2006.

Click here to read the complete set of exceptions.

(hat tip: The Consumerist)

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2 Responses to “Attention Those With Variable-Rate Fed. Student Loans”

  1. Jobsreap » Blog Archive Attention Those With Variable-Rate Fed. Student Loans | HSH … » Jobsreap Says: June 4th, 2009 at 9:27 pm

    [...] ATTENTION THOSE WITH VARIABLE-RATE FED. STUDENT LOANS | HSH … Posted by admin in Uncategorized on 06 4th, 2009 | no responses Private enrollee loans cannot be included in a federal compounding give . Borrowers who are ease in edifice cannot consolidate their loans until they graduate, as legislature repealed the primeval defrayal position loophole in 2006. … More: Attention Those With Variable-Rate Fed. Student Loans | HSH … [...]

  2. 4 Federal Student Loans to Consider Says: June 13th, 2009 at 4:10 am

    [...] Attention Those With Variable-Rate Fed. Student Loans (hsh.com) [...]

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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