Student Loan Interest Rates Set to Increase
Beginning July 1, 2006 interest rates on student loans are
set to increase substantially. Anyone with variable rate
Stafford and PLUS loans will need to consolidate these loans
prior to July 1 to avoid an interest rate shock.
Federal cuts to the student loan program added up to
billions. In addition, the Federal Open Market Committee voted
to raise interest rates to their highest level in five years.
The results are higher student loan interest, of which the rates
are set in part by rising bond prices.
This can place a heavy burden on many recent college
graduates that are carrying thousands in student loan debt. Many
of these recent graduates are getting out on their own for the
first time. They have new jobs, new expenses, and student loans
to pay off. Increases in average credit card debt held by
graduating seniors will also place a huge burden on recent
college grads.
It's a real double-whammy. Not only did their credit card
minimum payments increase in January, but their student loan
rates are also set to increase in July. Anyone with a variable
rate Stafford loan can expect a rate increase. This can make it
very difficult for these graduates, who often are not yet
earning a substantial salary. Parents too can find it difficult
to deal with PLUS loan rate increases.
The deadline is June 30 to make a change. Anyone that has not
consolidated their student loans into a fixed rate by that point
may be in for a surprise. For more information, visit
Sallie Mae for exact rate information.
