There is some good news for current borrowers. Rates on subsidized Stafford loans taken out after July 1 will carry a fixed rate of only 6% for the life of the loan. Future cuts in new fixed-rate loans are scheduled for the next three years. But all those rates will be fixed for the life of the loan.
Loan Consolidation Rates Drop -- But No Loans Available!
There's more good news, and bad. If you're a graduating senior looking to consolidate your student loans and lock in current rates, you'll get a great deal if you wait until after July 1st. The consolidation rate on variable loans will drop from the current 7.25% all the way down to 3.625%!
The new lower rate is available only for six months after graduation, so you have to act quickly. (Those who use their once-in-a-lifetime consolidation opportunity after six months have passed since graduation, will pay a slightly higher rate of 4.25%.)
The consolidation rate actually takes into account a "weighted average" of your outstanding loans, so your rate might be slightly different.
But the really bad news is that few, if any, lenders are currently offering consolidation loans -- as a result of the current credit crunch. At SimpleTuition.com there is an online comparison tool for all kinds of student loans. But this year there are no consolidation loans to compare.
Instead there is a link to the Department of Education's Direct Loan program -- the only consolidator left in the business. With an estimated $30 billion of student loans eligible for consolidation, from this year's graduates, and past un-consolidated loans, you can be sure the government will be swamped with applicants.
