#  Federal Student Loan Interest Rate

**and Consolidation Fact Sheet**

**Note: For all Stafford loans first disbursed on or after July 1, 2006,
the interest rate is fixed at 6.8 percent. For PLUS Loans disbursed on
or after July 1, 2006, the interest rate is fixed at 7.90 for Direct
PLUS Loans and 8.50 percent for FFEL PLUS Loans.** This change from a
variable to a fixed interest rate does not affect a borrower\'s variable
interest rate on loans made before July 1, 2006.

If you consolidate your loans you "lock in" the interest rate on the
loans being consolidated. For Direct Consolidation Loans, if the
application is postmarked or received electronically **by midnight June
30, 2006**, the Direct Consolidation Loan will be made using the current
interest rates. For FFEL Consolidation Loans, lenders are authorized to
use this same guidance. If you are interested in consolidating with a
FFEL Program lender, contact the lending agency to find out about their
deadlines.

+-----------------------------------------------------------------------+
| **What are the different kinds of loans?**                            |
|                                                                       |
| ***The Direct Loan Program*** provides loans directly from the U.S.   |
| Department of Education to students                                   |
|                                                                       |
| and their families.                                                   |
|                                                                       |
| ***FFEL Program*** loans are subsidized by the U.S. Department of     |
| Education and are provided by private lenders to students and their   |
| families.                                                             |
|                                                                       |
| ***Stafford Loans*** are student loans made through                   |
|                                                                       |
| the Direct Loan and FFEL programs.                                    |
|                                                                       |
| ***PLUS Loans*** are loans that parents can take out                  |
|                                                                       |
| for the educational expenses of their dependent undergraduate         |
| children. PLUS Loans are made                                         |
|                                                                       |
| through both the Direct Loan and FFEL programs.                       |
|                                                                       |
| ***Graduate/Professional PLUS Loans*** will be                        |
|                                                                       |
| available for loans certified on or after July 1, 2006; the terms and |
| conditions that apply to parent PLUS borrowers also apply to these    |
| students borrowers.                                                   |
+-----------------------------------------------------------------------+

**Why should I consolidate?**

A consolidation loan allows you to combine your federal

student loans into a single loan with one monthly payment,

which can be lower than the payment required under the

standard 10-year repayment option. The consolidation loan

interest rate is set as the weighted average of the interest rates of
the loans being consolidated (rounded up to the next 1/8%) and is fixed
for the life of the loan.

**Note:** Although loan consolidation can simplify and lower

your monthly payments, you should keep in mind that it

also can increase the total cost of repaying your loans. By

paying back your loans over a longer period of time (up to

30 years), you are charged more interest and end up paying

more. Also keep in mind that consolidation may affect your

grace period and deferment and cancellation options. Be an

informed consumer!

**How do I consolidate?**

To find out more about a Direct Consolidation Loan program, go to
[www.loanconsolidation.ed.gov](http://www.loanconsolidation.ed.gov/).
For information about the FFEL Consolidation Loan program, contact a
participating FFEL lender directly. Check your loan documents for your
lender's toll-free customer assistance contact number. Get all the
information before making your decision.