College loan rates rising slightly
WASHINGTON --Interest rates on federally backed loans for college students are set to edge higher on July 1, a student lender said Tuesday.
Based on the results of a Treasury Department bill auction, the in-school rate on the federal Stafford loan will rise by 0.08 percentage point from 6.54 percent to 6.62 percent, according to College Loan Corp., a San Diego-based lender.
Stafford loans represent the principal federal loan program. Depending on the school, a student may be offered a Stafford loan directly from the government, or may take out a government-guaranteed Stafford made by banks and other private lenders.
The rate for Stafford loans in repayment also will rise by 0.08 percent point, to 7.22 percent, while the PLUS loan rate for parents who borrow the money themselves will increase to 8.02 percent.
The rates, which are adjusted yearly, are based on the three-month Treasury bill auctioned Tuesday. That bill carried a discount rate of 4.805 percent. The three-month rate was the lowest since three-month bills averaged 4.735 percent two weeks ago.
College seniors can still save hundreds of dollars by consolidating their federal student loans right after graduation and taking advantage of a reduced interest rate offered during their grace period -- the six-month period after graduation, College Loan Corp. said. Graduates who consolidate during the grace period receive a 0.60 percentage point reduction, which translates to savings of around $700 for the typical student with $20,500 in loans, the lender said.
The current "grace period" consolidation rate is 6.62 percent, but it will rise to 7.25 percent for graduating seniors who miss the grace-period discount.
On the Net: