By C. Victoria Patrick
March 08, 2006
Never before in history has the cost of financing a college education gone up as much as this year.
Ask any finance major: It's not the price that matters. It's the terms.
The recently passed Budget Deficit Act legislation not only dramatically increases the interest rate on new student loans, it abolishes the borrower's right to consolidate their student loans while in school, and denies the borrower's freedom to re-consolidate, once out of school.
That means even if you found a better lender, offering you better terms, you can no longer switch lenders to re-finance, as with any other kind of loan, such as a mortgage.
In technical terms: you re about to be hosed by the 109th Congress.
And it all begins on July 1st.
Right now, however, borrowers who are still in school and who immediately consolidate their loans can lock-in their 4.7% interest rate -- forever. But if they don't consolidate before June 30th, they're likely to see those rates rise to 6.5% by the following day (July 1st) and as much as 8.25% later.
And borrowers who have already consolidated, have just enough time to re-consolidate at a lower rate before the regulations outlawing competition between lenders goes into effect.
There's lots of money at stake. All of it yours.
C. Victoria Patrick
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