consolidation department education loan student

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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Panel blasts aid system

With the July 1 deadline for student-loan consolidation looming over already-thin wallets, many are wondering what is being done to alleviate the problems of complicated application forms and paltry aid checks.

In an effort to remedy the problem, a Department of Education committee lambasted the country's financial-aid system in a recently released report. At the Commission on the Future of Higher Education's closed-door meeting Wednesday, members addressed proposed changes to higher-education affordability, access, accountability, quality, and innovation.

"The commission is committed to ensuring that America's colleges and universities are productive, efficient, and affordable," the report states. "But to our dismay, we have found that our nation's system of higher-education finance is increasingly dysfunctional, inefficient, and inadequate."

The report called for an overhaul of student financial-aid and recommended a "significant increase" of need-based financial-aid, a simplification of the Free Application for Federal Student Aid, and a consolidation of the 17 federal financial-aid programs.

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