ICHE Approves Engineering Degree
Challenge for Academic Excellence
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| Issue 2: June 2002 |
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Consolidating Student Loans
The American Association of State Colleges and
Universities has released information to assist graduates who are
considering consolidating their federal student loans. Borrowers should be
aware that some independent financial entities appear to be encouraging
immediate consolidation without disclosing the following.
*Effective July 1, 2002, new consolidated loans will have a lower interest
rate. The rate as of July 1 will be approximately 4 percent and will be set
for the life of the loan.
*Borrowers should question those offering to consolidate their loans
regarding benefits they could lose with a consolidated loan. One example of
lost benefits would be if the federal government offers loan forgiveness
provisions for teachers. If the teacher has already consolidated his or her
loans, the loan forgiveness provision may not apply.
*The lower interest rate occurs because the interest rates on most federal
student loans are variable, but the interest rate on a federal consolidated
loan is a fixed rate and locked in for the life of the loan. Interest rates
on federal Stafford loans are recalculated annually each July 1, and
fluctuate with the rate of short-term federal securities.
If you have any questions about consolidating loan information, contact the
U.S. Department of Education Student Financial Assistance Ombudsman at
877/557-2575.
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