Student Loan Consolidation: Clock Ticking to Get Best Rates26 April 2006
Many student loan borrowers are listening to industry experts by taking advantage of loan consolidation in record numbers. Student loan interest rates are expected to rise by 2 percentage points on July 1, 2006. By locking into a fixed interest rate, consolidation allows borrowers to lower their monthly payments. Consolidation with a fixed interest rate means borrowers could expect to cut their monthly payments nearly in half, an estimated 48 percent in savings.
Lower interest rates have made loan consolidation increasingly popular among borrowers in the past five years. More than $700 million has been consolidated with the Missouri Higher Education Loan Authority (MOHELA) this year, a 35 percent increase over the 2005 fiscal year. "With interest rates on the rise, MOHELA expects to see even greater consolidation volume by the end of this fiscal year, with estimates topping $1 billion in total consolidation volume. In the last year we've assisted more than 31,000 borrowers who have consolidated their loans, and we expect to help an additional 13,000 to 15,000 borrowers consolidate their student loans before July 1," says Greg Diamond, manager of loan consolidation with MOHELA.
Borrowers who would like to consolidate have until June 30, 2006, before the new rates take effect. If borrowers wait until after the June 30 deadline, they could expect to pay more than $4,000 in interest over the life of their student loans. (This example is based on a loan balance of $20,000 consolidated at 5.375 percent for 240 months with monthly payments averaging $136.00) Recent changes in federal regulations will also bring an end to in- school consolidation and spousal consolidation on June 30, 2006.
"Some people may be able to reduce their payments after consolidating. This is especially true for borrowers who have a high loan balance, since consolidation may make monthly payments more affordable," says Diamond. "This could be good news for a person just starting a career and who has other expenses putting a drain on their paycheck."
To apply for a SHARP Loan Consolidation(R) through MOHELA, visit http://www.mohela.org or call a Personal Consolidation Specialist at 1-888-866-4352, ext. 3707. Contact MOHELA for further details.
MOHELA is one of the largest nonprofit student loan secondary markets in America, and is a leading holder and servicer of student loans with more than $5.2 billion in assets, and loan purchase activity in excess of $1.2 billion per year. MOHELA advances its benevolent mission of eliminating barriers for students so they can access higher education through local, regional and national partnerships with a variety of educational and financial institutions.
For additional information, contact:
MOHELA
Will Shaffner
636-532-0600 x 3430
Source: prnewswire
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