Kaptur: Act Now to Save on Federal Student Loans

If you have a student loan—or if you’re a parent who borrowed money for your children’s college expenses—the following information might save you literally thousands of dollars.

The cost of those loans is about to rise substantially.  Every July 1, the federal government adjusts the rates on student loans. With interest rates on the rise, the out-of-pocket increase this year to students and families will be substantial—$3,500 or more for the average borrower.  But you can avoid most of the increase if you if you act quickly. 

How do you avoid this rate increase?  By consolidating your loans and converting those variable rate loans into fixed-rate loans.

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If you have a Direct Loan through the U.S. Department of Education, call 800-557-7392 or apply online at www.loanconsolidation.ed.gov.  If you have a bank-based loan through the FFEL program, contact one of the companies that own or service your student or parent loan(s).  If you have loans with more than one lender, you should consider consolidating those loans through the Department of Education.

The rate on Stafford loans for students who are currently in school, or whose loans are in grace period or deferment, will rise from 4.7% to 6.54%.  The rate for Stafford loans already in repayment will rise from 5.3% to 7.14%.  The rate for PLUS loans (for parents) will rise from 6.1% to 7.94%. 

After June 30, students can no longer consolidate Stafford loans while they are still in school.

I am concerned about the high levels of debt with which many students leave college.  I have opposed cuts in the federal student aid programs and supported legislation to cut student loan interest rates in half.  However, until the congressional leadership addresses this problem, the best course of action for Ohio families is to take advantage of the consolidation option.

But time is running out. 

If you need further assistance, please don't hesitate to call my office toll-free at 1-800-964-4699.