THE INTEREST RATES CHARGED ON FEDERAL STUDENT LOANS ARE RESET EACH YEAR ON JULY 1st…now what?

Posted on July 24, 2008. Filed under: -- Building Wealth, -- Money Help (in simple terms), -- Uncategorized, . More Resources For YOU! | Tags: , , |


By Molly Malone

Don’t forget that THE INTEREST RATES CHARGED ON FEDERAL STUDENT LOANS ARE RESET EACH YEAR ON JULY 1st.  Once you’ve already consolidated, however, you are uneligible to re-consolidate again. See the the current rates here.

Also, if all of your loans are from the same lender, you must consolidate with that lender. If you have loans from a variety of resources, you can consolidate at banks or places like Sallie Mae. I recommend VSAC (Vermont Student Assitance Corp),  they are where I have my loans and they are the best…TRUST me. They are not out to trick you into messing up so you end up with higher rates. They are honest, and very helpful. So much that they let me know when to consolidate, and I was fortunate to lock in a 2.875% rate. WHOOOHOO.

At this rate, I’m not even rushing to pay it off. It makes more sense to use the extra cashflow for other goals and investments that offer me a higher return on my money. Unfortunately not everyone is as fortunate.

Don’t forget that when/if you call them to also talk with them about the bonus .25% you can get taken off of your interest rate simply by signing up for them to automatically withdraw your payment from your checking account. Also BE sure your lender always has your updated address even if everything isset up on automatic, because when TAX TIME comes around, you’ll want to be sure you’re able to deduct the student loan interest if eligible ( deduct up to $2,500 per year in student loan interest if your income is less than $50,000 if you are single, and if your income is less than $100,000 if you file a joint tax return) and you’ll need your tax document in hand to take you deduction.

Don’t you just love student loans? =) 

 

2008/2009 Academic Year (1st Disbursement Date On or After 7/1/08)*
Loan Type Federal
Interest
Rate
Federal Fees Federal Fees
Borrowing with VSAC**
Subsidized Stafford
FOR undergraduates
6.0% 1% Origination Fee
1% Default Fee
0% Origination Fee
0% Default Fee
Unsubsidized Stafford
FOR undergraduates
6.8% 1% Origination Fee
1% Default Fee
0% Origination Fee
0% Default Fee
Subsidized & Unsubsidized Stafford
FOR graduate/professionals
6.8% 1% Origination Fee
1% Default Fee
0% Origination Fee
0% Default Fee
Parent PLUS or Grad PLUS 8.5% 3% Origination Fee
1% Default Fee
3% Origination Fee
0% Default Fee
(1% Default Fee for loans
approved before 5/19/08)

 

PS- Don’t ever ignore those student loan payments as they report to the credit agencies. So, if you default on your payments, they report you. In addition,  if you ever claim personal bankruptcy, you will still have to pay back your loans.

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