On July 1, interest rates for student loans are expected to increase up to 40%. Students with a debt of $20,000 could pay as much as $4,900 more over the life of their loans in a 20-year period. The rates are based on the 91-day T-bill auction that occurs each May. Based on today’s current T-bill auction, rates will jump as much as 2%.
Students who consolidate while in their grace period and prior to July 1, may receive a fixed rate as low as 4.75%. For students who are already in repayment, they may receive a rate as low as 5.375%. Current student loans are at a variable rate until consolidated and have an 8.25% cap.
“Based on the current T-bill rates, students who wait to consolidate until they are in repayment and after July 1 will be facing increased rates over 7%,” according to Mary Montiel of Collegiate Funding in San Diego, CA. “Many times students wait until their six-month grace period is up, but this year that will be a costly mistake.”
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