STUDENT LOAN INTEREST RATES TO INCREASE JULY 1
Posted By: Lori Lindsey on June 12, 2006 |
(Columbia, SC) – Student loan borrowers will soon see interest rates increase to the highest levels in five years.
The US Department of Education yesterday released the new federal Stafford Loan interest rates that will take effect on July 1, 2006. For a student still in school, the interest rate will increase from 4.7 percent to 6.54 percent. Those who have begun repaying their loans will see their interest rate increase from 5.3 percent to 7.14 percent.
“An interest rate increase this large may cause many student loan borrowers to see a significant increase in their monthly payment amount,” SC Student Loan Corporation President Chuck Sanders said.
Stafford student loans, the largest source of federal educational financial aid, have contained a variable interest rate formula since 1998. The variable rate was beneficial for student and parent borrowers as interest rates hit an all-time low in 2004, but with rates increasing in another month, we encourage borrowers to contact our counselors to determine if consolidation would benefit them.
A federal consolidation loan offers borrowers the opportunity to combine their eligible federal loans into one monthly payment with a fixed interest rate and an extended repayment period.
“If a student, parent or graduate consolidates his or her loan prior to July 1, they are going to lock in the current rates for the life of the loan and possibly reduce their monthly payment by a significant amount,” Sanders said. “If there has ever been a time when borrowers should consider consolidating their loans, that time is now.”
The average student borrower in South Carolina leaves college with approximately $17,500 in student loan debt. The monthly payments on a debt of this size will increase from $183 to $199 per month due to the interest rate increase.
SC Student Loan is a non-profit organization established by the state to make educational loans to South Carolina residents and students attending South Carolina institutions.
Since its inception in 1974, SC Student Loan has made loans to over 375,000 people, totaling $5.2 billion, while maintaining one of the lowest default rates in the nation.
For more information about these programs, visit http://www.scstudentloan.org or call 800-347-2752.
Media contact: Jennifer Hair (803) 612-5051; firstname.lastname@example.org
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