Joseph Hurley, who writes the College Money Guru advice column for Bankrate.com, will be answering questions all this week for people who want to know more about student loan consolidation.
Ask your question here.
 Dear College Money Guru,
If I already have an existing consolidation loan, under the Direct Loans program, can I convert it to a fixed-rate consolidation loan before July 1?
-- Javed
 Dear Javed,
Absolutely! If you last consolidated prior to February 1999, your existing Federal Direct Consolidation Loan is a variable-rate loan, and the interest rate is scheduled to increase by almost 2 percent on July 1. You can lock in a fixed rate by applying for a new consolidation loan at
loanconsolidation.ed.gov. But hurry, your application must be in by midnight on June 30. The interest rate on your new consolidation loan will be your current rate rounded up to the nearest one-eighth of 1 percent.
Borrowers with an existing federal consolidation loan under the Federal Family Education Loan (FFEL) program already have a fixed-rate loan and don't have to concern themselves with the June 30 deadline. However, if they also have an eligible variable-rate loan, such as a Stafford loan, they should consider consolidating as well. The two (or more) loans can be combined into one new consolidation loan at a fixed rate based on the weighted average of the interest rates of the loans being consolidated. FFEL borrowers can shop the various FFEL lenders for the best consolidation loan deal, since some terms can vary. Answers for:
Life after locking in a rate
Combining graduate and undergraduate loans Joseph Hurley, who writes the College Money Guru column for Bankrate and founded savingforcollege.com, will be answering extra questions this week as the June 30 deadline approaches for consolidating student loans at a low rate. |