Interest rates on student loans to rise sharply July 1
the Star Tribune reports:
Think prices are skyrocketing at the pump? Look at the price of student loans. The U.S. Department of Education announced Tuesday that after years of historic lows, interest rates on student loans will climb 1.84 points in July to as much as 7.14 percent for federal Stafford student loans and 7.94 percent for PLUS loans, which parents take out for their children. That's atop a similar rate jump a year ago.
Parents and students can avoid the increase by consolidating loans at rates as low as 4.75 percent before the July 1 deadline. Until loans are consolidated, or combined into one payment, rates can rise or fall yearly. Just a year ago, some lucky borrowers locked in at 2.8 percent for life.
For borrowers, consolidating is the last chance to save money before the government changes its student-loan program to save money itself. The Deficit Reduction Act, signed by President Bush in February, will reduce government spending on student loans by roughly $22 billion.
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