Interest rates, still at levels close to all-time lows, are on the rise. But for many students and recent graduates, an opportunity exists (but not for much longer) to lock in record-low rates on student loans.
According to the College Loan Corp. (CLC), "Federal student loan interest rates, set annually by the U.S. Department of Education, are reset every July 1st. This year, graduates can consolidate their student loans to lock in a rate of 3.375% for the duration of their repayment period. But graduates from the Class of 2004 can secure an even lower rate -- 2.875% -- by consolidating during their 'grace period,' the six months following graduation." If you graduated in May, your window of opportunity is likely expiring next month.
If you consolidate loans totaling $25,000, you may save up to $3,000 or so -- and that's not chicken feed. Some lenders are offering additional enticements, so shop around. The CLC, for example, is offering "a 1% cash rebate of the balance outstanding for qualified borrowers who make their first six monthly payments on time."
If you're wondering where you stand in the world of student loans, consider the following statistics:
- In 2003-2004, more than 1.4 million American graduates consolidated their student loans.
- The average loan amount consolidated was $26,500.
- The Department of Education projects that the average consolidation loan for 2004-2005 will be $27,200.
Here are some more articles on student loans and paying for college:
- Get Record-Low Rates
- You Can Pay for College
- Advice for College Freshmen
- Starting Late at College Savings
You'll find lots of additional tips on paying for college in our College Savings Center. Our Paying for College discussion board is a good place to ask questions you may have, and our book, The Motley Fool's Guide to Paying for School by Robert Brokamp, is also a handy resource.
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.