Student Loan: Consolidation Loans Interest Rate Review
When you take out federal student loans to finance your education you often hear the term ‘interest rate’ and may wonder how it affects your student loan. Interest rates are variable percentage amounts that dictate how much you will pay for the ability to take out a student loan or student loan consolidation loans. A lower rate means you will have significantly less to repay when your loans become due. The interest rates on your student loans are as important as the ones you will find on student loan consolidation loans so it is important to have a full understanding about them.
Changing Interest Rates
The interest rate on federal loans changes yearly according to the 91-day Treasury Bill (T-Bill) each May. This sets the rate for the full year. All federal loans and government based student loan consolidation loans have their interest rates based on the number presented by the US Treasury. For Stafford loans the interest rate will be that of the T-Bill plus 1.7%; on federal PLUS loans the rate is that of the T-Bill plus 2.3%.
Private student loans have a variable or fixed rate that changes according to the agreement illustrated in the promissory note. Sometimes private student loan consolidation loans are about the same rate as the federal due to competition for low rates to attract borrowers.
Notification of Changes to Student Loan
Whether you have typical student loans or student loan consolidation loans, you will receive written notification in case of any changes. The most common changes are to the interest rates or loan holder. If you interest rate is being changed for any reason, you will be given at lease a 30 day notification. You will also be advised of your new payment amount. If your loan holder has been changed (and they sometimes are), you will be notified of the change and where you are to direct your payments to prevent any lapse in your payment record.
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