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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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4 Steps to Make the Most of Your Student Loans
San Mateo, CA (PRWEB) July 20, 2006 -- Now that this year's cap-tossing and graduation parties are in the memory banks, the reality of paying for that higher education is setting in -- but students still have options to choose the best way to handle college and graduate school debt.
"Most Americans with student loan debt saw a flood of news articles encouraging borrowers to consolidate their loans before government loans underwent their annual interest-rate increase on July 1," said Brad Stroh, chair of Bills.com, who noted that because of the rising U.S. interest rate environment and a government-mandated reset of rates on student loans, rates on federal student loan debt increased by a substantial 1.84 percent on July 1. "Now that student loan rates are no longer at the 3 percent interest rates they hit during the economy's slowest days, it pays even more to be savvy about borrowing for school or returning to school."
According to FinAid, two-thirds of college students borrow to pay for school, with an average loan debt of nearly $20,000.