If you’ve taken out a variable rate student loan before June 30, 2006, the rate of interest charge against your loan will likely decrease on July 1, 2007. How Much?
All loans originated prior to 7/1/06 that have not been consolidated, will soon have a debiting rate (the rate you are charged on a loan) of 4.21% for the next annual period. If you are still in school, or in your grace period, the rate will be reset to 3.61%. Given what rates were prior to this change, this is a full 3+% less than what you are currently paying.
If you want to lock in this rate, you will need to consolidate through the Federal loan consolidation process. Generally, information on this is available at your financial aid office at your university.
Other loan rates will also adjust on July 1:
- New subsidized loans will drop from 6.8% to 6%,
- Fees on Stafford loans will drop 0.5%,
- Total borrowing limits will increase for independent students to $57,500 and to $31,000 for dependent students (BE CAREFUL WITH YOUR BORROWING!), and
- Undergraduate annual borrowing limits will increase by $2,000.
This is the good news. The bad news, as you all know, is that our economy is currently very weak. As a result, the federal government is lowering interest rates as a way to stimulate the economy. They want us to spend our money. Well, while it is a fact that you’ll be required to send smaller checks to repay your student loan, the option is always open to you to continue to make your current payments to repay your loan at a faster rate than planned. You could also save the money in your retirement plan or towards another goal that you have established for yourself.
What I’m suggesting: Take the opportunity to make a personal statement and take a step forward on your road to Financial Success.