government loan refinance student

Students Rush to Refinance as Deadline Approaches

With the cost of consolidating student loans set to spike on July 1, college students and recent graduates are rushing to refinance their debt, and consolidation companies are scrambling for their business.

In recent weeks, lenders have bombarded borrowers with letters and e-mail messages exhorting them to lock in current interest rates before they rise by nearly two percentage points, to 7.14 percent. At least one lender is sending students checks worth hundreds of dollars that they can cash when they make their first payment on a consolidation loan.

But the lenders' aggressive and sometimes misleading sales pitches make many financial-aid advisers uneasy. They say they have been inundated with calls from worried students who have received offers that are disguised as overdue bills or official government correspondence.

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Students scrambling to lock in student loan rates

JEFFERSON CITY, Mo. (AP) — Thousands of college students and parents are clogging phone lines and rushing to Internet sites. They're scrambling to refinance college loans before a sharp interest rate increase this weekend.

An almost-two-percentage-point interest rate increase for federal student loans kicks in Saturday. Advisers say not refinancing could cost thousands of additional dollars in interest in the decades after a student enters the work force.

The federal government adjusts interest rates on its student loans each July first based on a formula tied to the yield on short-term Treasury bills.

Right now, the rates are 4.7 percent for students and 5.3 percent for graduates.

On Saturday, the rates will shoot up to 6.54 percent for students and 7.14 percent for graduates.

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