Hours Remain for Borrowers to Lock in a Low Interest Rate Through Student Loan Consolidation

In a matter of hours, on July 1, interest rates on most federally guaranteed student loans will jump by nearly 2 full percentage points. To avoid the rate increase, borrowers must submit their Federal Consolidation Loan application by midnight on Friday, June 30, 2006.

To respond to last-minute requests from borrowers seeking to lock in today’s interest rates through student loan consolidation, Sallie Mae will divert all available customer service personnel to focus on helping individuals with consolidation-related issues.

“By redirecting all available resources in the final hours of this unusual interest rate environment, we will help our borrowers receive the best possible service and the lowest possible rate when they consolidate their loans,” said Keith D’Ambra, senior vice president of loan consolidation, Sallie Mae.

To save time, Sallie Mae encourages customers to go online to apply for consolidation at http://www.smartloan.com. Sallie Mae’s complimentary, online concierge service allows borrowers to submit the necessary paperwork to meet the June 30 deadline for locking in today’s low interest rates. By completing the online concierge request form by midnight June 30, customers will satisfy the submission guidelines to qualify for the pre-July 1 interest rates.

Loan consolidation involves paying off current federal education loans in full and creating a new loan. The new loan features a fixed interest rate calculated as the weighted average of the rates of the loans consolidated, adjusted up to the nearest 0.125 percent, and not to exceed 8.25 percent. Through student loan consolidation, customers who apply for consolidation before July 1 could lock in an interest rate as low as 4.75 percent for the duration of their loan’s term, as opposed to a rate of 6.625 percent after July 1. For example, a borrower with $20,000 in federal education loan debt could save as much as $5,100 in interest expense by consolidating before June 30.