This seems to be a season jam packed with deadlines! First there was the tax deadline in April, then there was the Medicare Part D deadline in May and now there is a deadline for locking in low student loan rates at the end of June.
Student loan interest rates are adjusted on July 1 each year. Over the past few years, these rates have been adjusted down to historical lows. But the honeymoon is about to end, student loan interest rates are expected to rise a whopping 2% on June 30. Current student loan rates range from 4-6%, depending on the type of loan.
- Stafford loan rates are currently at 5.3% and are expected to increase to above 7% at the start of July.
- Recent graduate loan rates are probably going up to around 6.7% from the current 4.7%.
- Student loan rates for parents (PLUS) are expected to increase to about 8%.
The final interest rate increases are going to be announced after next week’s Treasury bill auction. These increases could cost you some serious money. The CNN article estimates that not-consolidating this June could cost you between $2,000 and $11,000.
Luckily if you act now, you can lock in these low rates and lower your monthly payment by consolidating your student loans. If you qualify for consolidation, you need to investigate your student loan consolidation options before the end of June.
Do you have student loans? Have you already consolidated your student loans? Share your tips and feedback in the comments section below.
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If I only have one loan (Stafford, 5.05%), is it possible for me to lock in the rate?
On a related note, my loan is not that big (~$3000 outstanding), so would it be a better idea to just pay it off as soon as possible instead of making the minimum payments (~$55/month)?
I think your loan balance is too small to qualify for consolidation. And since you can probably pay it off quickly, it’s not really worth the trouble.
If you can comfortably afford to pay off your loan early, go for it. Just talk to your lender first about potential issues and make sure you have other active accounts on your credit report first.