Student Loan Rate Adjustments July 2011

Just a quick note that at the end of this week, the adjustable interest rate on college loans will be reset, as they do every July 1. I used to be more on top of this just to make sure we should not be consolidating, but since 1) I paid off all my student loans this month, and 2) we have been busy with the home buying/selling process, I forgot to check the proposed rates until it was too late. Good news though…

…rates are going down again. I like to watch finaid.org for the latest rate information. I also am only interested in the rates on the variable loans from prior to 2003, when my wife last attended school. Those are the most important ones right now when it comes to possible loan consolidation because they are the lowest.

For those of you that do not know, consolidation works off the weighted balance of all loans consolidated. Therefore, if you have some loans that are variable and others fixed at say 6.8%, than the balances of each loan and their interest rates will be weighted to determine the new fixed rate. I hope to have a more detailed post on this in the future once we go through the consolidation process on my wife’s loans. The main point is it brings the high interest rate loans down while bringing the low rates up, thus w weighted balance approach.

My wife’s current variable rates are at 2.47%, and calculated to be 2.36% come July 1, 2011. That is excellent news. I keep putting off consolidating since the rates keep dropping every year. The problem is my wife also has several loans with a fixed 6.8%. So while the rates do continue to drop, and would also drop our weighted average of student loans once consolidated, I probably am only saving minimal amount by putting consolidation off. I will admit I have not gotten to look into how much we would save and if it was worth it to consolidate, although dropping them all down to a fixed rate in the 4% range would certainly save some money. Maybe after all this house buying/selling/renting stuff settles down, I will look more into the consolidation process.