If you have variable rate student loans, mark July 1, 2008 on your calendar. After that date, you can lock in interest rates 3 percentage points lower than what’s available now. I’m not eligible for lowering the rates on my student loans because I’ve already consolidated and I have no new student loans to add into the mix. But if you haven’t consolidated yet, you may be able to benefit from rates as low as 3.62%.
I have about $11,000 left to pay on my student loans at 4.25%. As savings interest rates have decreased recently, I’ve been increasing the amount I’ve been paying to eliminate this debt. This loan is the only debt I have that requires interest payments, and I’ll be happy to pay it off.
Earlier this month I sent $750 to student loan repayment. That payment is up from $500 the month before, $250 earlier this year, and about $150 earlier than that. In July, I’ll either maintain my $750 payment or increase the amount to $1,000 depending on my June financial results.
Update! There are a lot of questions being asked already, so here are some details.
- Since many lenders no longer perform student loan consolidation, you may be better off starting your search with the U.S. Department of Education who will.
- Only variable-rate student loans are eligible. All student loans initiated after July 1, 2006 are fixed-rate loans, so these loans will not qualify for the lower interest rate, but you can still consolidate multiple loans to reduce your number of payments, your minimum due, and extend your total repayment duration.
- If you’re still in school, you are not eligible for the lowest rate. If you’re in the six-month grace period, you can receive the lowest interest rate on the loans that are over two years old (usually from your freshman and sophomore years). If you’ve waived your grace period you’ll only qualify for a higher rate.
- If you’ve already consolidated your student loans, you won’t qualify for the lowest rate.
Note: The Department of Education’s loan consolidation application will not indicate the new, low interest rate until July 1. Consolidation applications are on hold until that time.
3.6% student loans: Consolidate now, Liz Pulliam Weston, MSN Money, June 23, 2008.
Updated February 10, 2011 and originally published June 23, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.