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MONEY | Cutting college loan costs
Rates on federally sponsored college loans are scheduled to increase Saturday, and consolidating existing loans will become less advantageous then. -Many borrowers can get discounts such as a quarter-point reduction in the interest rate for paying by automatic debit and another one-point reduction in the rate after they make 36 on-time payments. On a $30,000 consolidation loan, that would save an additional $6,000 over 20 years.
-Some families might find it cheaper to borrow money by taking out a second mortgage or home-equity credit line, or to lower the payment by extending an existing loan.
-To learn more about federal student loans, see the Department of Education's Web site at .gov. For details on consolidation loans, see Sallie Mae's Web site at www.smartloan.com.
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Student loan rates, amount of financial aid on the rise
BALTIMORE - Borrowing money for college just got more expensive when higher interest rates on federal student loans went into effect July 1.
However, students may be offered more help thanks to a trend toward increases in need-based aid, which includes grants and scholarships.
At Towson University, need-based financial aid for students has jumped more than 300 percent in the last six years, from about $1 million in 2000 to more than $6 million this year, according to Vince Pecora, director of financial aid.
Pecora said rising interest rates on all types of loans, not just the most recent increase, as well as the skyrocketing cost of college, led to the dramatic increase in aid at Towson.
“I don't think there's a general awareness of the percentage [increase], though we've alerted every single borrower we have and the federal government has notified them," Pecora said.