consolidate loan refinance student

Students rushing to meet loan deadline

Students and graduates are running out of time if they want to refinance college loans before an interest rate hike this weekend.The federal government adjusts interest rates on its student loans each July 1 based on a formula tied to the yield on short-term Treasury bills.If loans are consolidated before the Friday at midnight deadline, the interest rates will remain fixed.A consolidation loan allows students to combine their federal loans into a single loan with one monthly payment.The variable rate on a common Stafford loan dipped to as low as 2.77 percent for students in the 2004-2005 school year and 3.37 percent for graduates already making repayments. Those rates rose last year to 4.7 percent for students and 5.3 percent for graduates.On Saturday, the rates will shoot up to 6.8 percent for students and 7.14 percent for graduates.

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Refinance rush for student loans is on

Recent college graduates and even some current college students are rushing to refinance and consolidate their student loans before a sharply higher interest rate takes effect Saturday.

Lenders say phone lines are jammed as borrowers seek to lock in rates that had dropped to historic lows in recent years.

Under a new law, however, the rate for federal student loans will go to 6.54 percent for current students and 7.14 percent for graduates. Current rates are 4.7 percent for students and 5.3 percent for graduates.

Depending on the payoff period--typically 10 years but longer in some cases--the higher rates could cost borrowers thousands of dollars more.

"We've heard some figures that they might save as much as $2,000 (by locking in current rates) but that's really very student specific," said Elaine Henry, financial aid director at Emporia State University.

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