refinance federal student loan
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Lenders busy at refinancing student loans
College students who do their homework before this weekend on the cost of their student loans could save themselves thousands of dollars.
An increase of nearly 2 percentage point in interest rates for federal student loans will kick in Saturday. Advisers say that students who do not refinance their loans could pay thousands of additional dollars in interest decades after a student enters the work force.
The federal government adjusts interest rates on its student loans each July 1, based on a formula tied to the yield on short-term Treasury bills.
The variable rate on a common Stafford loan dipped to as low as 2.77 percent for students in the 2004-05 school year and 3.37 percent for graduates already making repayments.
Last year, those rates rose to 4.7 percent for students and 5.3 percent for graduates.
More refinance federal student loan info
Rate rise spurs student loan refinancing
Former and current students are rushing to beat a deadline tomorrow to refinance their college loans before a big interest rate increase kicks in.
"That's why we're inundated," said Paul Simino, president of OneSimpleLoan, a Tampa, Fla., student loan consulting firm. "We've hired an additional 60 people to help out."
A change in federal rules means adjustable rates for the interest on Stafford loans no longer will be available. Instead, borrowers must pay interest at fixed rates, which will rise nearly 2 percent to about 7 percent beginning tomorrow.
Stafford loans are the most common federally guaranteed loans used by students.
Interest rates are rising by 2.4 percent on PLUS loans, which refer to the federal Parent Loan for Undergraduate Student program that parents can use to pay their children's college expenses.