consolidation federal government loan student

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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Counting Down the Hours Until Student Loan Deadline

PASADENA, Calif., June 27 /PRNewswire/ -- As many student loan borrowers already know, interest rates for all federal student loans will be increasing by around 2 percent on July 1.

For most student and graduates with education loans, this increase will cost tens of thousands of dollars in added fees and interest.

However, many savvy borrowers have taken advantage of a free government program to save this money and eliminate a few financial worries, as well: student loan consolidation.

Student loans can be consolidated until 11:59 p.m. on Friday, June 30. Consolidation allows borrowers to lock in a low interest rate for the life of their loans and make just one, low monthly payment for the duration of the repayment period.

As the federal deadline approaches, student loan consolidation companies are being swamped with requests for information on this program.

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