law school student loan
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Now's the time to slim down loans
Just as hurricane season comes every year, so, too, does the quandary of whether students and their parents should consolidate student loans.
This year, the answer is fairly easy for most borrowers: Yes.
I told you that recently, but this is a reminder because the deadline for consolidating to get the best interest rates is June 30. And you certainly don't want to wait until then.
By law, interest rates on most existing federal student loans are variable and are calculated based on a formula that uses the interest rate of the 91-day Treasury bill set at the last auction in May.
That auction took place on May 30. As a result, the interest rate for the one-year period beginning July 1 will be 6.54 percent for borrowers who are in school or who are in a grace or deferment status.
More law school student loan info
Interest Rates Rise on Student Loans
Students who rely on federally-subsidized Stafford loans are being told to consolidate their loans before steep interest rate hikes go into effect tomorrow.
On July 1, interest rates on Stafford loans—the principal form of federal student loans—will rise from 5.3 percent to 6.8 percent for new loans and 7.14 percent for outstanding loans. This marks one of the single largest rate increases in the program's 41-year history.
Though Stafford loans are used more by students at Harvard's graduate and professional schools than by its undergraduates, over 9 million people—students and former students of all sorts—currently have outstanding loans.
Over the past several weeks, the interest rate hikes—which were put into place by the 2005 budget resolution—have drawn fire from Democratic lawmakers.