consolidation loan student

Federal loan rates face changes

After Saturday, college students at OSU and across the country will no longer be able to secure a federal loan at the current interest rates. Rates on the Stafford and Parent PLUS loans are set to increase by 2 percent, with the rates on Stafford subsidized and unsubsidized loans increasing from a variable of 4.7 percent to a fixed rate of 6.8 percent, and the Parent PLUS loans increasing from a variable rate of 6.1 percent to a fixed 8.25 percent. These loans can be bundled into one consolidation loan and secured at a lower fixed interest rate of 4.7 percent. In order to minimize the number of students repaying loans at higher interest rates, the federal government is allowing students to consolidate their federal loans while they are still in school. Students who are currently enrolled at any accredited institution have the option of applying for a Direct Consolidation Loan from the U.S.

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ConsumerWatch: Consolidate Student Loans Intelligently

Vashawn Smith said he's taken a number of phone calls from lenders who want to sell him a student loan consolidation plan for his master's degree program. Smith said he gets about a phone call per day and letters in the mail. All the offers encourage him to lock in his $23,000 in loans at a lower rate.

University of Nebraska-Omaha finance professor David Volkman said lower rates are the biggest advantage of consolidation.

"There's all kinds of offers out there, and the student has to be careful and evaluate the offers carefully. "The student needs to look at: Will there be closing costs? There are lenders out there that are saying no closing costs. Then, there are other lenders out there that are offering benefits after you consolidate."

Volkman said students should shop around.

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