In response to the increase in interest rates beginning in July, the Department of Education announced last week that it would guarantee current interest rates to any loan applicant who submits a loan consolidation application by July 1, 2000.
On that day, interest rates on student loans will soar once again. Rates could go as high as 8.25 percent, the statutory cap, affecting new and old loans.
“It’s not because of anything in legislation or administration, it is simply due to an increase in the cost of money,” said Ivan Frishberg of U.S. PIRG, the national version of Oregon Student Public Interest Research Group.
To afford the expensive costs of college, students often need to take out more than one loan. Now students can combine their loans by consolidating and lock into current lower interest rates.
“You could always consolidate your loan, but now what it does is take the variable rate and turn it into a single loan rate which can be locked in,” Frishberg said.
Individuals who may benefit most from this type of loan are students who have just graduated.
“People who need to know about this at the University of Oregon are recent graduates,” Frishberg said. “Graduates have a six month grace period (to start paying) their loans; if they consolidate now they may be able to receive their in-school rate which is typically below 7 percent.”
Many students are unaware that interest rates will increase or that the consolidation option is available.
“We are working with financial offices as well as sending e-mails to get the word out on the Internet,” Frishberg said.
Apparently, not many students here at the University are aware of the consolidation issue.
“We haven’t gotten to much traffic about that issue,” Financial Office Associate Director Jim Gilmour said. “The information came out kind of late.”ASUO members think that students should find out student loan information on their own.
“It is not ASUO’s responsibility to make sure that students pay their loans,” Senate President Lindsey McLean said. “Students need to make their own decisions about it.”
While consolidation may not decrease interest rates for all students, it is an option that is worth looking into.
“Whether you are eligible or not depends on each individual and their situation,” Frishberg said. “But it is a very good idea to look into.”