Laura Teegarden
Daily Egyptian
The historically low loan interest rates of last year are unavailable
as of July 1, when the rates increased by 1.93 percent for the next
year.
Richard Steudal, assistant director of the SIUC Financial Aid Office
said students had the opportunity to lock in last year's low rate if
they consolidated their federal Stafford student loans before the July
1 deadline.
"It's always been that way, it's just that the rates have never been as low as they were last year," he said.
Consolidating loans combines several payments from multiple lenders to
one single payment to one lender. Steudal said many students took the
opportunity to consolidate their loans.
"Basically, what this did was give students the opportunity to lock in a low rate," he said.
The new rate for the federal Stafford Loan is 5.3 percent for those out
of school and in repayment, and 4.7 percent for students. This is
almost 2 percent higher than last year's rate.
Loan interest rates had steadily declining in the last few years and
last year's rate hit a historic low, but now they are gradually rising,
Steudal said.
Steudal said he doesn't foresee the rates dropping as low any time soon.
Many lending institutions sent information to students warning them of
the upcoming deadline, but Steudal said it is not the University's job
to tell the students what to do.
"We had a tremendous number of phone calls about whether they should do this or not," he said.
Steudal said if the number of phone calls the financial aid office
received concerning consolidation was an indication of the number of
students who consolidated their loans, many took advantage.
The students who should be most concerned with consolidating loans are
graduating seniors or students who have already graduated, he said.
Students who consolidate their loans do not have the option to
reconsolidate later on. In addition, if a current student decides to
consolidate, the standard six-month repayment grace period may be taken
away depending on which organization the consolidation is done through.
"For those students that did consolidate, they probably realized a big
benefit," he said. "The students that didn't consolidate, there's no
reason to jump out the window."
Steudal recommends those who have not already consolidated be sure to
do so by next year's deadline if interest rates continue to climb.
Reporter Laura Teegarden can be reached at
laura_teegarden@dailyegyptian.com
