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| Student Loan Borrower |  What's happening with student loan rates?
As for the interest rate on Stafford loans, it is increased for the first time in five years, on July 1, 2005. This is the country's most important source of student loan funds. Last year these loans were at record low rates– 3.37 percent. By consolidating student loans by June 30, 2005, graduates who acted quickly were able to lock in that low rate. The rate is now 5.3 percent for students repaying their student loans. That rock-bottom interest rate only applied to Stafford loans disbursed after July 1, 1998.
What is a federal consolidation loan?
Having a federal consolidation loan, your lender pays off the balances of all the loans you choose to consolidate and then issues you a new loan. A consolidation loan can lengthen your repayment period and may lower your monthly loan payments by as much as 50 percent.
How do you calculate the interest rate on a consolidation loan?
Remember, the interest rate on a federal consolidation loan is determined by taking the weighted average of interest rates on the federal education loans you have and rounding up to the nearest one-eighth of a percentage point, capped at 8.25 percent. The interest rate ranges from borrower to borrower, but averages from 2.875 percent to 4.25 percent.
Is a consolidation loan right for me? How much money can I save?
Try to find out by contacting your student loan lenders. Be as specific as possible, ask plenty of questions. The purpose is to find out how your particular mix of student loans might be consolidated.
 Where can I find out more about consolidation loans?
Information, applications and calculators for consolidation loans are available on the Sallie Mae, Collegiate Funding Services, and College Loan Corporation and NelNet Web sites. Information on consolidation loans from the U.S. government is available on the U.S. Department of Education Web site.
How can I get a discount on a consolidation loan?
There are lenders, which will reduce the interest rate on a consolidation loan by a quarter percent when you sign up to have your monthly loan payment debited from a checking or savings account. Sometimes a lender may also knock down your interest rate by 1 percent after you make 48 consecutive, on-time payments. Make sure to ask about discounts when shopping for a consolidation loan.
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