Sallie Mae Advises Student Loan Borrowers to Evaluate Consolidation Lenders
RESTON, Va., May 23 /PRNewswire/ — With student loan interest rates
set to rise between 1.5 and 2 percentage points on July 1, students and
graduates should put a student loan consolidation application on the top of
their reading list this spring. In the race to beat the rate hike, Sallie
Mae, the nation’s largest consolidator of student loans, cautions borrowers
that choosing the wrong lender could be a costly mistake.
   (Logo: http://www.newscom.com/cgi-bin/prnh/20030617/SLMLOGO-a )
   “Consolidating student loans before rates rise on July 1 could save a
borrower thousands of dollars, but it is critical that students and
graduates be savvy when it comes to selecting a lender,” said Patricia
Scherschel, vice president of student loan consolidation for Sallie Mae.
“Choosing the wrong lender could jeopardize their ability to secure the
lowest interest rates and the best discounts available to them.”
   For example, Scherschel warns that applying for consolidation with an
ineligible lender could delay the process and inadvertently cause a
borrower to miss the June 30 deadline. Borrowers should know that –
     * If their loans are held by a single private-sector lender, they should
       contact that lender to request consolidation.
     * If their loans are held by more than one private-sector lender, they
       may consolidate with any private-sector lender.
     * In most cases, if all of their loans are held by various private-
       sector lenders, they may consolidate with a private-sector lender but
       not with the Direct Loan program.
     * If their loans are Direct Loans, they are eligible to consolidate with
       the Direct Loan program or any private-sector lender.
   All lenders use the same interest-rate formula, but some lenders offer
richer borrower benefits, such as interest rate discounts for timely
payments. Sallie Mae, for example, offers eligible borrowers with a balance
of at least $10,000 a rate discount of 1 percentage point after they make
their first 36 payments as initially scheduled. Customers will continue to
receive the reduction as long as they make on-time payments. In addition,
they can receive an immediate 0.25-percentage-point reduction in the
interest rate on their Consolidation Loan after they sign up to pay via
direct debit; this benefit is available for balances of $7,500 or more.
   Interest rate discounts like those offered by Sallie Mae and other
private lenders can add up: A borrower with a $20,000 balance who applies
to consolidate with Sallie Mae prior to July 1 is eligible for nearly
$3,400 in savings from interest-rate reduction rewards, assuming a
consolidation rate of 4.75 percent and a 20-year repayment term. The
quarter-point interest rate discount for auto-debit accounts for a little
more than $1,000 of the total savings. The 1 percentage-point rate discount
after three years of on-time payments is the more valuable benefit, because
it significantly reduces the cost of the loan for the majority of the
repayment period.
   “Make sure you investigate the lender’s benefit program and get
accurate savings estimates before you apply,” advises Scherschel.
   In addition, Sallie Mae offers combined billing for its Federal
Consolidation Loan borrowers who have private education loans with the
company. Borrowers also have the option to consolidate their private
student loans with Sallie Mae, which could extend their repayment term and
lower their monthly payments.
   “Don’t be short-sighted. Consolidating your student loans will lengthen
your repayment term, creating a long-term relationship with your lender, so
it’s important to also consider lenders that can offer flexible repayment
options, life-of-loan servicing, and a single point of contact,” says
Scherschel.
   For more information about student loan consolidation, visit
http://www.SallieMae.com/loanconsolidation.
Written by Originator on June 13th, 2006 with
no comments.
Read more articles on Loan Consolidation.
- [+] Digg: Feature this article
- [+] Del.icio.us: Bookmark this article
- [+] Furl: Bookmark this article