RESTON, Va., May 17 /PRNewswire/ -- Once the pomp and circumstance
surrounding 2007 commencement exercises draws to a close, college graduates
will quickly begin the next chapter in their life: preparing for the real
world. That means finding a job, deciding where to live and, for many
graduates, managing their student loan repayments.
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"It is very important for students who are about to graduate from
college to take a proactive approach when it comes to repaying their
student loans," says Martha Holler, spokesperson for Sallie Mae, the
nation's leading saving- and paying-for-college company. "Because there are
a number of repayment options available today, students need to ask
questions, do their research and then choose a repayment strategy with a
reputable lender that works for their individual financial situation."
For many graduates, student loan consolidation is the answer. Student
loan consolidation enables borrowers to combine each of their eligible
education loans into a single, new, federally guaranteed loan --- a Federal
Consolidation Loan with a fixed interest rate. In addition to simplifying
record-keeping and check-writing responsibilities, loan consolidation can
give borrowers payment relief by reducing their monthly payment by more
than 50 percent, with the total repayment period stretched from the
standard 10 years to up to 30 years, depending on the actual amount of
education debt being consolidated.
Federal Stafford and PLUS loans that have been disbursed before July 1,
2006 charge variable interest rates established by a federal formula and
based on the last auction of 91-day U.S. Treasury bills in May. Interest
rates on loans disbursed after that date are fixed at 6.8 percent
(Stafford) and 8.5 percent (PLUS). Federal student loan consolidation has a
fixed interest rate, based on the weighted average of the interest rates of
the student loans being consolidated, rounded up to the nearest 0.125
percent or 8.25 percent, whichever is less.
To help take the guesswork out of when to apply for a federal
consolidation loan, Sallie Mae is offering customers with variable-rate
Stafford and PLUS loans, as well as 2007 graduates who want to preserve
their six-month grace period, a service called "Best Rate Promise."
Specifically, if Sallie Mae receives a customer's signed consolidation
application any time before July 1, it will base the new consolidation rate
on the pre-July 1 rates or the new variable-rate schedule that takes effect
July 1 - whichever is the "best" rate.
Additional interest rate savings --- 1.25 percentage points --- can be
realized for student and parent customers who consolidate their Stafford,
PLUS and other eligible federal education loans using a Sallie Mae Federal
Consolidation Loan by making scheduled loan payments on time and by using
automatic debit to make payments electronically.
"If you are a recent graduate, take the time now --- not later --- to
assess your loan repayment strategy. If student loan consolidation works
for you, shop around for the best deals. At the same time, look for lenders
that make it easy to consolidate by offering online applications and quick
application processing," adds Holler.
SOURCE Sallie Mae
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