Will all the federal interest rate cuts happening lately effect my student loan interest rate?
Beginning last year, newly issued federal student Stafford loans went from a variable interest rate to a fixed interest rate (maximum 6.8%.) If you have variable rate loans the interest rate cuts will help you. If you have fixed rates, the current rate cuts won’t matter. However, Subsidized Stafford loans (the need-based version) are ratcheting lower over the next five years due to legislation that Congress passed last year as part of the College Access and Cost Reduction Act of 2007. You can only consolidate once with the same batch of loans. If you do have the variable rate loans you may consider waiting until after July 1st when the rate gets reset for this year and then consider consolidating. The new interest rate will be the average interest rate of all your loans, rounded up to the nearest 0.125%. Go to http://loanconsolidation.ed.gov/ for more info.
