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Student Loan Financial Group Announces Rate Increase

[Jul 15, 2007.]

 

Student Loan Financial Group says interest rates on variable-rate student loans will rise eight basis points to .08 percentage points on July 1st. Therefore, student borrowers with older variable-rate loans are being encouraged to apply for loan consolidation by June 30th to take advantage of the lower rate.

The Student Loan Financial Group is considered one of the leading financial entities involved in the business of federal student loan consolidation.

The majority of federal Stafford and PLUS loans prior to July 1st of last year have variable interest rates. Meanwhile, interest rates on loans that were given out after July 1, 2006 remain fixed at 6.8 percent for the Stafford and 8.5 percent for the PLUS.

The President of Student Loan Financial Group, John Wrinn, stated, "…College grads who still have variable rate loans may consider applying to consolidate before their six month, post-grad grace period ends. Students can lock in a lower rate if they lock the rate prior to June 30th. Also, parents with PLUS loans will save an eighth of a percent by consolidating before July 1st, instead of waiting."

In a student loan consolidation, the lender pays off the student's federal loans in full, then sets up a new loan with a different interest rate and a more extensive repayment period. The new loan has a fixed rate which is derived from the weighted average of the interest rates on the loans that are being consolidated, then rounded up to the nearest 0.125 percent or 8.25 percent, based upon whichever is the smaller figure.

For those Stafford and PLUS loans that still have a variable rate, the rate after July 1st will be 6.62 percent for the Stafford and 8.02 percent for the PLUS. It should be noted that student loan consolidation requires no fees, prepayment penalties, or credit background checks. Consolidation can cut a student's monthly loan payment by close to 50 percent. The repayment period can also be extended to up to 30 years.



Julie Ann Amos
July 15th 2007

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