FYI: Time is right to consolidate student loans

Verna Hazen Director of Financial Aid

Now is a great time to think about consolidating your federal student loans. With a federal Direct Consolidation Loan you can combine your federal student loans into one new loan at an all-time low interest rate.

The interest rates on most federal student loans are variable and are adjusted annually with a cap of 8.25 percent. On

July 1, 2002, the interest rates on student loans dropped to 4.06 percent. This historic low provides an opportunity for significant savings.

The Office of Financial Aid at RIT has compiled the following list of common questions and answers about federal consolidation loans. Please feel free to contact the office for more information at 585-475-2186 (voice) or 585-475-6909 (TDD) or via the web at www.rit.edu/financialaid.

Am I eligible to consolidate my student loans?

You can consolidate your loan as a direct consolidation loan if you are out of school and you have at least one Direct Loan or Federal Family Education Loan (FFEL) student loan.

Why should I consolidate?

In addition to historically low rates, you will have one lender and one monthly payment, as well as flexible repayment options.

How can I find out what my consolidation loan payment will be?

Use the Direct Loans online calculator to find out. It can be found at www.loanconsolidation.ed.gov/borrower/bconsol.shtml

How long will the interest rates stay this low?

Interest rates are set each year in late June. We can’t predict what the interest rate will be after July 1, 2003.

I have received mail from all kinds of companies offering to consolidate my loans. Which ones are good companies?

We don’t know everything about all the private companies in the loan consoli-dation business. However, there are some advantages to consolidating your federal student loans through the federal Direct Consolidation Loan program.

So what are they?

Direct Consolidation Loans offer lower interest rates for in-school and in-grace consolidation. Direct Consolidation Loans will never be sold to another lender (FFEL consolidation loans can be sold). No minimum loan balance is required.

Where do I find more information?

Additional information is available at the Direct Consolidation Loan Information Center at www.loanconsolidation.ed.gov or 1-800-557-7392 (voice) or 1-800-557-7395 (TDD).