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Loan Consolidation a Viable Repayment Option to Managing Student Debt.

RESTON, Va., May 17 /PRNewswire/ -- Once the pomp and circumstance surrounding 2007 commencement exercises draws to a close, college graduates will quickly begin the next chapter in their life: preparing for the real world. That means finding a job, deciding where to live and, for many graduates, managing their student loan repayments.

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"It is very important for students who are about to graduate from college to take a proactive approach when it comes to repaying their student loans," says Martha Holler, spokesperson for Sallie Mae, the nation's leading saving- and paying-for-college company. "Because there are a number of repayment options available today, students need to ask questions, do their research and then choose a repayment strategy with a reputable lender that works for their individual financial situation."

For many graduates, student loan consolidation is the answer. Student loan consolidation enables borrowers to combine each of their eligible education loans into a single, new, federally guaranteed loan --- a Federal Consolidation Loan with a fixed interest rate. In addition to simplifying record-keeping and check-writing responsibilities, loan consolidation can give borrowers payment relief by reducing their monthly payment by more than 50 percent, with the total repayment period stretched from the standard 10 years to up to 30 years, depending on the actual amount of education debt being consolidated.

Federal Stafford and PLUS loans that have been disbursed before July 1, 2006 charge variable interest rates established by a federal formula and based on the last auction of 91-day U.S. Treasury bills in May. Interest rates on loans disbursed after that date are fixed at 6.8 percent (Stafford) and 8.5 percent (PLUS). Federal student loan consolidation has a fixed interest rate, based on the weighted average of the interest rates of the student loans being consolidated, rounded up to the nearest 0.125 percent or 8.25 percent, whichever is less.

To help take the guesswork out of when to apply for a federal consolidation loan, Sallie Mae is offering customers with variable-rate Stafford and PLUS loans, as well as 2007 graduates who want to preserve their six-month grace period, a service called "Best Rate Promise." Specifically, if Sallie Mae receives a customer's signed consolidation application any time before July 1, it will base the new consolidation rate on the pre-July 1 rates or the new variable-rate schedule that takes effect July 1 - whichever is the "best" rate.

Additional interest rate savings --- 1.25 percentage points --- can be realized for student and parent customers who consolidate their Stafford, PLUS and other eligible federal education loans using a Sallie Mae Federal Consolidation Loan by making scheduled loan payments on time and by using automatic debit to make payments electronically.

"If you are a recent graduate, take the time now --- not later --- to assess your loan repayment strategy. If student loan consolidation works for you, shop around for the best deals. At the same time, look for lenders that make it easy to consolidate by offering online applications and quick application processing," adds Holler.

CONTACT: Beth Guerard of Sallie Mae, +1-703-984-5621
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Publication:PR Newswire
Date:May 17, 2007
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