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| Thursday, October 13, 2005 |
| Consolidation can save thousands in loan repayment |
Local experts say consolidation of loans could save students thousands of dollars in interest payments.Currently interest rates are at 3.46 percent as opposed to the recent rates of more than 8 percent. With interest rates at an incredible low, now is the time to consolidate, especially for graduating seniors, said Roberta Johnson, interim director of financial aid.
Chad Olson, student loan program assistant, said if a student has a debt of $15,000 with an interest rate of 8.25 percent, a monthly payment on a 10-year repayment plan would be $183.98. Throughout the 10 years of repayment, the interest payments would total $7,077.
A student with the same amount of debt and payment plan who consolidated his or her loans to the current interest rate of 3.46 percent would have a monthly payment of $148.33. After the 10 years of payment, the interest would come to $2,799. The difference in interest repayment would be $4,278, Olson said.
He said the current interest rate is the lowest it's been in 35 years.
"[The difference is] with rates so low there's no reason why you wouldn't want to consolidate," Olson said.
Students can consolidate their loans at any time - there is no deadline, Johnson said.
Although there is no deadline, Johnson said she recommends to students who are approaching graduation to consolidate their loans soon.
"If a student were to consolidate their loan when they were no longer in school they would lose their six month grace period [for repayment of loans]," she said. "The first month their loan is consolidated would be their first month of repayment."
After a student leaves school they typically have a six month grace period before they have to start paying back their loans, she said.
If a student consolidates his or her loans while they are in school they will retain their grace period, Johnson said.
If a student who no longer attends Iowa State wants to consolidate loans, it is still recommended, Johnson said. Instead of a 3.46 percent interest rate, a borrower who has already graduated from college will receive a 4.06 percent interest rate.
"If a student no longer in school want to consolidate their loans I recommend that they go through the process of consolidating at about the fourth month of their grace period," Olson said. "By the time the consolidation gets processed the six months will be up."
The student will then begin their payments with a 4.06 percent interest rate.
Johnson recommended that students go to www.loanconsolidation.ed.gov to consolidate a loan. "There are other agencies that do consolidation and are flooding the market to get students' business," she said.
To consolidate loans, all students need is the four-digit PIN number they used for the Free Application for Student Aid (FAFSA), and to know their debt level, Johnson said.
To find out debt level, students can log on to AccessPlus at http://accessplus.iastate.edu and look under "loan history" or look on the Federal Government Web site list.
"I've heard from a few students who [have consolidated their loans without checking around] and are not having a positive experience in terms of the service they are being provided," Johnson said. "Please look at the fine print. If it looks too good to be true it probably is." |
posted by Simon @ 2:08 PM  |
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| 1 Comments: |
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Hey Simon, I read your post, Consolidation can save thousands in loan repayment. I would like to link to it on my site Student Loan Refinance with your permission.
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Hey Simon, I read your post, Consolidation can save thousands in loan repayment. I would like to link to it on my site Student Loan Refinance with your permission.