State PIRGs' Higher Education Project
218 D Street SE
Washington, DC 20003
(202) 546-9707

Director:
Ivan Frishberg

Advocate:
Ellynne Bannon

 

To: Student Activists
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 loans.

House Switchboard: (202) 225-3121

Or you can call your Members of Congress by using the student aid hotline: 1 (800) 574-4AID.

Ellynne Bannon
State PIRGs Higher Education Advocate
218 D Street SE
Washington, D.C. 20003
202.546.9707
www.pirg.org/highered