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Interest Rates Up on Student Loans
College students who borrow money to make it through school will have to deal with higher rates if they missed the June 30th deadline for consolidating their loans. There`s now a 6.8% fixed interest rate on the Stafford Loan as of July 1st.
Interest rates for student loans change at this time every year. But many students say they simply need loans to get an education, and say one of their last worries is the interest rate they`ll have to deal with once you graduate.
Bob Baier finished his undergraduate degree last December. This fall Bob will begin his graduate studies, and once again he`ll take out loans, this time with a very different interest rate. But Bob says the rise in Stafford Loan rates isn`t a total shock.
"Personally, I expect it," says Baier.
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July 1 deadline for students to consolidate loan debts
Consolidate now. That's the short fix and the best advice for graduates who owe money on student loans. They need to lock in the lowest possible rates before July 1, when rates for the popular Stafford loan will jump to 6. 54 percent.
The more complicated fix: The nation should re-examine its system for how students borrow money for college. The system wastes money, and the Office of Management and Budget has the numbers to prove it.
Student loans made through private lenders cost the federal government 10 times more than direct loans provided by the Education Department, an OMB report released last year found. Some students borrow directly from the government, but many borrow guaranteed student loans through private lenders such as Sallie Mae. For every $ 100 spent on student loans, the government spent only 84 cents for direct loans, compared to about $ 12 for government-guaranteed loans from private lenders, the study found.