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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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Check out the changes in college loan programs

First of all, the two largest federal student loan programs, Stafford and PLUS, have fixed rates as of July 1: Stafford at 6.8 percent and PLUS at 8.5 percent.

Since late 1992, both programs had come with variable interest rates. The change will be beneficial if interest rates continue to rise.

Second, at a time when more Americans are relying on loans to pay for college, loan limits have been raised. Under the old rules, college freshmen could borrow up to $2,625; the new limit is $3,500. Lending limits for sophomores and graduate students have risen accordingly.

Third, fees for taking out student loans are declining and, in some cases, will disappear by 2010.

Finally, there is no longer in-school or spousal consolidation. Since July 1, current students can't consolidate.

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