From: Ellynne Bannon
State PIRGs' Higher Education Advocate
Date: April 28, 2002
Consolidation loan benefit at risk-- Call your Representative
today and urge him/her to oppose the loan industry's proposal
to raise student consolidation loan interest rates ***
Federal student loan interest rates are expected to fall to
an all time low of about 4 percent this July. This is will
be an excellent opportunity for student borrowers to save
thousands of dollars.
The new interest rates will save the typical borrower more
than $2,800 over the life of their student loan. These new
rates on Federal higher education loans, set to change on
July 1, are expected to be about 2.0% lower than current rates
and the lowest in the history of the student loan program.
Unfortunately, Sallie Mae and some other members in the loan
industry are proposing to raise student consolidation loan
interest rates, by changing the consolidation loan interest
rate from fixed to variable. This proposal comes at a time
when millions of students and their families are struggling
to pay for college. According to the Department of Education
the typical borrower now graduates with almost $17,000 in
federal student loan debt. And more than half of all Pell
Grant recipients (low-income students who are most in need
of grant-aid) graduate with student loan debt -- the typical
Pell Grant recipient who borrows graduates with almost $19,000
in loan debt.
This proposal would cost the typical student borrower $2,800,
and the typical Pell Grant borrower $3,100 over the life of
their loans. It is a bad deal for students and may be a specious
attempt by some in the loan industry to raise their profits
at a substantial cost to students.
Proponents of raising the cost of consolidation loans are
pushing to have their proposal included in the Supplemental
Appropriations bill this week. Please contact your member
immediately and urge him/her to oppose any proposal that would
raise student consolidation loan rates.
Action: Call your Representative today and urge him/her to
oppose the proposal to raise the cost of student consolidation
Switchboard: (202) 225-3121
can call your Members of Congress by using the student aid
hotline: 1 (800) 574-4AID.
State PIRGs Higher Education Advocate
218 D Street SE
Washington, D.C. 20003