student loan stafford loan
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Consolidation deadline for student loans nears
Kimberly Brown was eager to consolidate her multiple student loans - and lock in a low interest rate - when she graduated from Mercer University in May.
"You really don't have a choice with the interest rates going up in July," she said.
Brown, who has $30,000 in student loans, is just one of thousands of borrowers across the country who have just one week left to decide if they want to consolidate.
Starting July 1, the interest rate on federal loans for current borrowers who are still in school, in their grace period or in deferment will increase from 4.7 percent to 6.54 percent. Loans for borrowers in repayment will increase from 5.3 percent to 7.14 percent.
Stafford loans, one of the most common, will be set at a fixed rate of 6.8 percent.
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Graduated interest: act fast to lock in rates
College costs keep spiraling upward, and now the cost of borrowing to pay for higher education is about to spike, too.
Students and their parents have taken comfort in a half-decade of ultra-cheap college loans, loading up on debt to cover the bills. About 8 million people borrowed $60 billion this year in education loans issued or guaranteed by the federal government. Now only those who act quickly will be able to keep a lid on the cost of that debt.
A combination of rising interest rates and legislative changes to the student loan program will alter the student loan landscape on July 1. Rates on existing Stafford loans — the bedrock government-guaranteed student loans that 44 percent of full-time undergraduates rely on to pay tuition bills — change annually and are pegged to 91-day Treasury bills.