Students and Graduates Lock in Today’s Low Interest Rates Through Student Loan Consolidation
 RESTON, Va., May 30 /PRNewswire/ — Student loan interest rates will
climb 1.84 percentage points this summer — one of the largest increases in
the history of the federally guaranteed student loan program. Students,
graduates and parents who have student loans can avoid the rate hike if
they apply to consolidate their student loans by June 30.
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   “Student loan consolidation is the best way to protect yourself from a
very significant interest rate increase on July 1,” said Keith D’Ambra,
senior vice president of loan consolidation for Sallie Mae, the nation’s
leading provider of education funding and largest consolidator of student
loans. “Time is money, and waiting too long to consolidate your student
loans will cost you for many years into the future.”
   Following are the interest rates that will go into effect on July 1,
2006 for Federal Stafford and PLUS Loans first issued on or after July 1,
1998 and on or before June 30, 2006:
   * Stafford Loans (in school, grace and deferment periods): 6.54 percent
   * Stafford Loans (repayment): 7.14 percent
   * PLUS Loans: 7.94 percent
   By law, interest rates on existing Federal Stafford and PLUS Loans are
variable and reset annually on July 1 based on the 91-day Treasury-bill
yield from the last auction in May, plus a margin of interest set by
federal law. For loans issued after July 1, 1998 and before July 1, 2006,
Stafford Loans are capped at 8.25 percent and PLUS Loans may not exceed 9
percent.
   To guard against rising student loan interest rates, current Stafford
and PLUS Loan customers may consider student loan consolidation, which
features a fixed interest rate calculated as the weighted average of the
rates of the loans consolidated, adjusted up to the nearest 0.125 percent,
and not to exceed 8.25 percent. Through student loan consolidation,
customers currently enrolled in school or in their six-month grace period
can potentially lock in an interest rate as low as 4.75 percent for the
duration of their loan’s term, as opposed to a rate of 6.625 percent after
July 1.
   “With interest rates currently at their fourth-lowest levels in history
and set to rise, it is important for both students and parents to carefully
consider their consolidation options in order to take advantage of
significant savings,” said Richard Bellows, executive director of financial
aid, Butler University. “We are encouraging our continuing students and
their parents, as well as this spring’s graduates, to act quickly to reduce
their education borrowing costs.”
   Consolidating student loans by June 30 adds up to real savings. For
example, a student graduating from college this spring with a balance of
$20,000 who consolidates before July 1 at an interest rate of 4.75 percent
will have a monthly payment of $129. If that same customer waits until
after July 1 to consolidate at an interest rate of 6.625 percent, his or
her monthly payment would jump to $151, $22 higher simply because the
borrower waited until after July 1 to consolidate. In total, waiting to
apply for consolidation until after July 1 would cost this borrower $5,123
more in interest over the life of his loan.
   “One month from today, this opportunity will be gone,” continued
D’Ambra. “Missing the June 30 deadline could cost a bundle. Student and
parent borrowers simply cannot afford to procrastinate when it comes to
consolidating their student loans.”
   In addition, Sallie Mae offers borrowers who wish to consolidate an
even deeper discount of up to 1.25 percentage points. Eligible borrowers
with a balance of at least $10,000 will receive a rate discount of 1
percentage point after making their first 36 payments as initially
scheduled. These borrowers will continue to receive the reduction as long
as they make payments according to that schedule. In addition, borrowers
with a minimum balance of $7,500 are eligible to 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. Combined, these benefits
can provide the average borrower with $4,200 in savings on a $25,000 loan.
   D’Ambra cautions student borrowers to be savvy when shopping for a
consolidation lender: “With the deadline looming, contact your primary
lender for the fastest and surest way of securing today’s rates. Watch out
for misleading marketing materials and get the facts before you sign on the
dotted line. Waiting until the 11th hour could put you at risk. Also, if
you are a Direct Loan borrower, consider a private lender like Sallie Mae.
Private lenders offer principal and interest rate reductions not available
in the Direct Lending program.”
   Separately, with the passage of legislation from 2002 and the Deficit
Reduction Act earlier this year, interest rates on new Stafford Loans
issued on or after July 1, 2006 will be fixed at 6.8 percent. PLUS Loans
issued on or after July 1, 2006 will receive an interest rate of 8.5
percent. While rates may be on the rise, federal student loans are still
the most economical way to finance a higher education. “It would be very
unfortunate for families to hear this news and think they cannot afford
college,” said Tom Joyce, vice president of corporate communications for
Sallie Mae. “Student loans carry competitive interest rates — lower than
other consumer loan classes — and offer a number of other benefits, such
as flexible repayment plans, deferment and forbearance options and tax
deductibility.”
   Sallie Mae offers Stafford, PLUS and Consolidation Loan borrowers the
ability to apply for a loan, review their rights and responsibilities and
submit their “signatures” electronically through Sallie Mae’s Web site,
http://www.SallieMae.com. For more information, individuals can visit
http://www.SallieMae.com or speak with Sallie Mae’s specialists by calling
toll free:
   * Consolidation Loans: 800/448-3533, Monday through Thursday, 8 a.m. to 11
     p.m., Friday 8 a.m. to 8 p.m., and Saturday 10 a.m. to 4 p.m. Eastern
     Time
   * Stafford Loans: 888/2-SALLIE, Monday through Thursday, 8 a.m. to 8 p.m.,
     and Friday, 8 a.m. to 5 p.m. all time zones
   * PLUS Loans: 800/891-1410, Monday through Friday, 8 a.m. to 11 p.m.
     Eastern Time
   News media are invited to visit http://www.SallieMae.com/News for
additional resources and information. To schedule a media interview,
contact Erin Korsvall at 703/984-5136.
   SLM Corporation (NYSE: SLM), commonly known as Sallie Mae, is the
nation’s leading provider of education funding, managing nearly $127
billion in student loans for 9 million borrowers. Sallie Mae was originally
created in 1972 as a government-sponsored entity (GSE) and terminated its
ties to the federal government in 2004. The company remains the country’s
largest originator of federally insured student loans. Through its
specialized subsidiaries and divisions, Sallie Mae also provides debt
management services as well as business and technical products to a range
of business clients, including colleges, universities and loan guarantors.
More information is available at http://www.SallieMae.com. SLM Corporation
and its subsidiaries are not sponsored by or agencies of the United States
of America.
SOURCE Sallie Mae
Written by Originator on June 11th, 2006 with
no comments.
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