Daily Egyptian Summer05 Edition
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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
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The Daily Egyptian is published by the students of SIU at Carbondale. Except during vacations and exam weeks, The Daily Egyptian is published Monday through Friday during the fall and spring semesters and TWThF during the summer semester. The Pulse, Carbondale Entertainment Guide, is published once a week on Thursday.Last update: Wednesday, July 6, 2005 at 8:19:40 PM
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