(Rates for mortgages and other loans can be found at BankingMyWay.com.)
Kevin Walker, CEO of SimpleTuition.com, notes that the combination of the credit crunch, the lower subsidies on student loans and concerns about future defaults have combined to make consolidations a very unattractive product for financial institutions.
Sallie Mae (SLM), the best known student-loan provider, has also dropped out of the consolidation market.
Sallie Mae spokesperson Martha Holler points out: "There is no immediate need to consolidate as the new rates will be in effect for the next year and many other options, such as extended and graduated plans, exist to help borrowers manage student loan repayment."
Parents Get the Worst Deal
There's even more stunning interest rate news for parents who have PLUS loans: Those who took them out before July 1, 2006 will see their rates drop from the current 8.02% to 5.01%, starting in July. Those loans carry a variable rate that is also tied to the T-bill auction rate.
But parents who have taken out PLUS loans in the past two years, or who are planning to take a PLUS loan for the 2008-2009 year, will be stuck paying 8.5% -- forever (on most PLUS loans, except for those taken out directly from the Federal government at a 7.9% fixed rate).
In other words, PLUS loans have become very unattractive. But these loans, made to parents, might also be the best deal in town -- if you can find a lender. With home-equity loans tougher to get these days, and retirement plan borrowings limited by many companies, it will be difficult for many families to find, much less afford, financing for college this fall.
