**Consolidating College Loans Before July 1 Could Save Students and
Families Thousands of Dollars When Paying for College**

On July 1, 2006 the interest rates on outstanding federal student loans
are expected to rise to just over 7 percent---the highest rate in six
years---and the rate on outstanding federal parent loans are expected to
rise to about 7.8 percent. Student borrowers who consolidate before July
1st may be eligible to lock in a rate as low as 4.75 percent over the
life of their loan(s)---which would save the typical undergraduate
borrower almost \$3,500 over the life of his or her loan. But students
and parents must act quickly to ensure that they can lock in these lower
rates.

**What is loan consolidation?**\
Students and parents who have taken out at least one loan through the
federal government\'s Federal Family Education Loan (FFEL), Direct Loan
or Perkins Loan programs may be eligible to lock in a low fixed rate
over the life of their loan(s), but only if they consolidate by June 30,
2006.

**Why should student and parent borrowers consider consolidating before
July 1, 2006?**

On July 1st the interest rates on outstanding federal student loans are
expected to rise to just over 7 percent---the highest rate in six
years---and the rate on outstanding federal parent loans are expected to
rise to about 7.8 percent. Student borrowers who consolidate before July
1st may be eligible to lock in a rate as low as 4.75 percent over the
life of their loan(s)---which would save the typical undergraduate
borrower almost \$3,500 over the life of his or her loan. Parent
borrowers who consolidate before July 1st may be eligible to lock in a
rate as low as 6.1 percent over the life of their loan(s).

Consolidation may also deliver other benefits to borrowers such as
eliminating the need for dealing with multiple lenders or allowing
borrowers to enroll in payment plans based on a percentage of their
income. Borrowers who make a set number of on-time repayments or who
make payments through automatic banking can obtain additional interest
rate reductions.

**How can I consolidate my loans?**

If you have a Direct Loan through the Department of Education you can
call 1-800-557-7392 or apply on-line at
[http://www.loanconsolidation.ed.gov](http://www.loanconsolidation.ed.gov/).
If you have a loan through the FFEL program (a bank-based loan) you can
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 can chose to consolidate
through the Department of Education or with any lender that provides
federal consolidation loans.

**When is the deadline to consolidate and lock in a low fixed rate?\
**The deadline is June 30, but you should apply before then to beat the
rush of applications.

**Can student borrowers consolidate their loans while they are still
in-school?\
**Before July 1st, you may be eligible to consolidate your loans while
you\'re still in school. Consolidating while you\'re still in school
will let you lock in the grace-period rate of 4.75 percent (borrowers
who consolidate their loans, before July 1st, and while in repayment
will lock in an interest rate of 5.375 percent). Be sure to let your
consolidation lender know that you are enrolled at least half-time in
college so that you will not be required to begin repayment until you
leave school or fall below half-time enrollment.

**Can borrowers reconsolidate their loans?\
**If you have already consolidated your loans, you cannot consolidate
again.

**Can borrowers consolidate Perkins loans?\
**Students who've borrowed Perkins loans, which carry a fixed interest
rate of 5 percent and offer loan forgiveness to graduates working in
certain fields such as teaching or social work, should carefully
consider whether or not consolidation is right for them. If Perkins loan
borrowers consolidate their loans, they lose their loan forgiveness
benefits.

For more information borrowers should contact the Department of
Education at 1-800-557-7392 or
[http://www.loanconsolidation.ed.gov](http://www.loanconsolidation.ed.gov/)
.

**How are Democrats working to make college more affordable?**

Earlier this year, the Republican-led Congress cut \$12 billion out of
the federal student aid programs in order to help finance tax breaks for
the wealthiest Americans. As a result of this Republican Raid on Student
Aid, college is even further out of reach for millions of American
students and their families.

In contrast, Democrats continue to work to make college more affordable.
House Democrats introduced legislation, the [Reverse the Raid on Student
Aid Act (H.R.
5150)](http://edworkforce.house.gov/democrats/education_raidonstudentaid.shtml ),
that would cut interest rates in half from 6.8 percent to 3.4 percent,
for students with subsidized loans - which go to students with the most
financial need - and from 8.5 percent to 4.25 percent for parent
borrowers, starting in July 2006.\*

Under H.R. 5150, the typical undergraduate student borrower with
\$17,500 in student loan debt would save \$5,600 over the life of his or
her federal college loans.

\* Beginning on July 1, 2006 all NEW student and parent loans will be
set at fixed rates of 6.8 percent for undergraduate students and 8.5
percent for parent borrowers.

For more information please visit:
<http://edworkforce.house.gov/democrats/education_raidonstudentaid.shtml>