consolidation education loan student

Students, parents rushing to consolidate loans before deadline

College students and parents are clogging phone lines and rushing to Internet sites in a scramble to refinance college loans before a sharp interest rate increase this weekend.An almost 2 percentage point interest rate increase for federal student loans kicks in Saturday, and advisers say that not refinancing could cost thousands of additional dollars in interest in the decades after a student enters the work force.Tim Bornemeier, managing director for Lincoln-based student loan company Nelnet, said Thursday he’s been seeing a "record-setting amount of calls."Bornemeier said Nelnet has seen a steady increase in call volume over the last six to seven weeks.He said operations have gone smoothly, as most people calling have been prepared and fairly well-educated about the process. Nelnet was prepared, too, as Bornemeier said the company added 100 people to its workforce over the past few months to deal with the increased consolidation business.Bornemeier said Nelnet, which is one of the largest student loan consolidators in the country, this year expects to exceed the more than $4 billion in loan consolidations it did last year.Other loan agencies also are experiencing high demand.For-profit Sallie Mae, the nation’s largest student loan holder and one of Nelnet’s main competitors, is on pace to meet or exceed last year’s late crush of student loan consolidations, said Pat Scherschel, the company’s vice president for loan consolidation.At the Missouri Higher Education Loan Authority, the nation’s 12th largest student loan holder, calls were coming in at a clip of up to 15 a second, contributing to a tenfold increase in applications for student loan consolidations, said Raymond Bayer Jr., the agency’s interim executive director.Nonprofit student loan agencies in states including Iowa, Indiana, Ohio and Texas also have seen sizable increases in their applications as the rate increase approaches, said Alexa Marrero, spokeswoman for the Education Finance Council, an association of nonprofit secondary student loan marketers.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.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.

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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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