College students have until Friday, June 30, to consolidate their education loans and lock in their variable-rate borrowings at a fixed rate, U.S. Rep. Tim Ryan, said Monday.

With the financial aid office at Youngstown State University as a backdrop, Ryan, D-17, urged reporters to get the word out to college students that if they fail to act, they face paying the higher rates that take effect July 1.

The new student loan variable rate goes to 6.8% from 5.3%, Ryan said, and the variable rate for parents who take out loans in behalf of their children could go as high as 8.5% from 6.1%.

Democrats in Congress have proposed putting a cap on interest at 3.4% for student loans, Ryan said, but that whether that passes is contingent on that party taking control next January.

So the best that students can do is consolidate their loans and lock them in at a fixed rate of 5.3, he said. If they wait until after July 1, the fixed rate will be 7.14%.

Parents can convert their 6.1% variable rate to a fixed rate. After July 1, the fixed rate for parental loans will be 7.94%.

Most student loans have been variable-rate Stafford loans, YSU’s director of financial aid, Elaine Ruse, said afterward. Perkins loans, which charge a fixed rate, have been in the minority. After Friday, the Stafford loans will be fixed-rate.

Full-time undergraduate students at YSU have $57 million in outstanding loans, she reported. Of that sum, $6.2 million is unsubsidized (that is, taken out at market rates), $45 million was borrowed as student loans. Perkins loans (lent at fixed-rates) constitute only $500,000 and parental loans total $5.2 million.

Nearly 85% of undergraduate students at YSU receive some form of financial aid to pursue their studies, whether subsidized loan, grant or scholarship, Ruse said, although loans make up the largest portion of financial aid.

Students can contact her office to apply for a form so they can consolidate their loans and lock in at a fixed rate. While the application and promissory note need not be approved by Friday, the application must be submitted by that day, she stressed.

The president of YSU, David C. Sweet, noted that 46% of the average tuition bill — which rises to $6,700 for the 2006-07 academic year — is offset by some form of financial aid.

YSU “remains the best buy in Ohio,” Sweet said, and 82% of all students there receive “some form of scholarship aid.”

Under terms of their loans, students must begin repayment six months after they graduate or leave school. Ten years is the maximum term, Ruse said, and for amounts of $10,000 or less, that term is not extended. For amounts well above that figure, say $20,000, the lender can extend the student rate to 20 years.

Source: business-journal.com

This entry was posted by Taman Siswa on Tuesday, June 27, 2006 at 11:51 pm and is filed under College Loans. Tags: College, College Loans, Education News, Financial Aid, Grant, Loans, Scholarship, Student, Student Loan, . You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.