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Dec 27, 2007
The student loan consolidation rate is calculated as the weighted average rate of the current rates charged on the loans being consolidated, rounded up to the nearest one-eighth of a percent. This means the rate you'll pay won’t be more than one-eighth of a percent more than the effective rate on your individual loans. The rate is fixed for the life of the Consolidation Loan.
Stafford Loans
Stafford Loans disbursed after July 1, 2006 have a fixed interest rate of 6.80% in effect from July 1, 2006 through June 30, 2008 for loans in an in school, grace, deferment, or repayment status. For loans disbursed prior to July 1, 2006, the Stafford Loan rates change annually and have variable interest rates based on the 91-day Treasury-bill rate + 1.7% during school. An additional .60% increase is assessed upon graduation. This rate is capped at 8.25%
It is important to note that the government will pay the interest on a subsidized Stafford Loan while you are in school, during your six month grace period and also during authorized periods of deferment. If you have an unsubsidized Stafford Loan, you are responsible for the interest payment, but you have the ability to defer interest payments until after graduation.
PLUS Loans
PLUS Loans disbursed after July 1, 2006 have a fixed interest rate of 8.50% in effect from July 1, 2007 through June 30, 2008. For loans disbursed prior to July 1, 2006, the PLUS loan interest rate is adjusted annually, but is capped not to exceed 9.0%. Similar to the Stafford Loan, the PLUS Loan rate is also calculated based on the 91-day Treasury-bill rate. However, unlike the Stafford Loan you must add 3.1 percentage points to the rate. Parent borrowers can take up to 10 years to repay and PLUS Loan and will incur no penalties for early repayment.
Grad PLUS Loans
The Grad PLUS Loan interest rate for loans guaranteed on or after July 1, 2006 is fixed for the life of the loan and is 8.5%
Federal Consolidation Loans
The interest rate on a student consolidation loan will be based on the weighted average of the interest rate on your existing educational loans rounded up to the nearest 1/8th percent, not to exceed 8.25%. The interest rate is fixed for the life of the loan.
We here at Student Financial Advisors can offer you the barrower the following benefits for consolidating your student loans with us.
Other benefits for consolidating with Student Financial advisors include, lowering your monthly payment by as much as 51%. By extending the repayment period it is possible to lower your monthly payments by as much as 51%. Also, by consolidating, making payments is easier to keep track of, because you only get one monthly bill. We suggest that you use the optional automatic bill payment; you will still get monthly statements.
By consolidating
you renew your deferment eligibility, up to three years. Lastly, when the consolidation loan pays off all of your student loans this reflects positive on your credit report and therefore improves your credit.
As of February 1, 1999, both Federal Family Education Loans (FFEL) and Direct Consolidation Loans have the same interest rate. Before February 1, 1999, Consolidation Loans had variable interest rates.
If you have a Stafford Loan made on or after July 1, 1995, you can reduce your student loan consolidation rate by up to point six of a percentage point or more if you can consolidate before the end of your grace period.
Student loan consolidation allows you to simplify the repayment process by combining several types of federal education loans into one loan, so you make just one payment a month. Also, based on the incentives above your monthly payment might be lower than what you’re currently paying. Based on all of the incentives to consolidate your monthly payment and your effective student loan consolidation rate should be lower then you would otherwise pay.
Source:
http://www.transworldnews.com/NewsStory.aspx?id=31068&cat=15
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