consolidation debt loan n student

Student loan interest rates set to increase

Today is the last day student loan holders will have to consolidate their debt without feeling the hit of the nearly 2-percent increase in interest. The Federal Stafford loan rate will rise 1.93 percent July 1 and parent loans for undergraduate students (PLUS) will rise 2.4 percent, marking the largest jump since 2000. The change stems from a new bill that was incorporated into the Deficit Reduction Act of 2005, S. 1932, according to a press release from the Montana Guaranteed Student Loan Program.Ron Muffick, director of business relations and programs for the MGSLP, said, "Because of the interest rate change effective July 1, I encourage borrowers to contact their lenders to explore all of the options for repayment including consolidation."The average student debt for a Montana borrower is $20,000, quite less than the national level of $50,000, according to the American Council on Education."The rate increases mean higher interest payments for students and graduates over the life of their loan," said Jim Stipcich, president of Student Assistance Foundation.

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Students scramble to secure lower interest rates on loans

Workers at Student Loan Finance Corp. in Aberdeen are breathing a sigh of relief this month after an unusually busy June.

That's because interest rates on student loans rose by 1.84 percent nationwide on Saturday. Borrowers had through Friday to request consolidation of such loans. For some debtors, consolidation was attractive; for example, doing so could mean lower monthly payments but over more time.

"We had a huge surge of activity," said Dave Zahn, a manager at Student Loan Finance Corp.

To illustrate, on June 1, the business handled 195 phone calls requesting consolidation. On June 30, the same type of calls numbered 1,589.

The federal government didn't announce the new rates until late May, which explains why calls poured in during June, Zahn said.

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