Posted June 10, 2006 by

Student loan rates didn’t just jump; they skyrocketed!

The student loan rates effective July 1, 2006 are now officially in, and believe us, they’re not pretty.
Interest rates on Stafford and PLUS loans disbursed prior to July 1, 1998 will be 1.84 percentage points higher on July 1. For student loans disbursed after July 1, 2006, Stafford and PLUS loans will have a 6.80% fixed rate of interest. (Additional interest rate information is available here.)
Of course, these rates have an impact on student loan consolidation rates, too. Consolidated student loans are based on a weighted average of the rates on those existing student loans you wish to consolidate, rounded up to the nearest 1/8th of one percent or 8.25%, whichever is less. So, the higher your interest rates on your individual student loans, the higher your consolidation loan interest rate.
Now you may think that 2 percentage points is no big deal. However, the power of compounding means that you could pay thousands more in interest fees over the life of a consolidated loan.
That’s why you’re encouraged to “jump” now consolidate your student loans before the July 1st rate hike.

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