government student loan refinancing

Student loan consolidation deadline is Friday

People with student loan debts are scrambling to consolidate their loans before interest rates increase on Saturday, July 1.

Interest rates on existing federal student loans will increase nearly 2 percent to between 7 and 8 percent in July, as part of an adjustment the government makes every year.

That means that if you currently have unconsolidated federal student loans, your overall payments will rise.

Experts say that with interest rates headed upward, consolidation could be a good deal for many debtors.

"There really isn't a lot of reason not to do this," says Seamus Harreys, dean of student financial services at Northeastern University in Boston.

"It's the student loan world equivalent of refinancing a mortgage," says Martha Holler, a spokeswoman for Sallie Mae, a leading provider of student loan financing, though there is a caveat.

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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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