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Deadline Nears to Consolidate Student Loans


Many new college graduates are beginning their adult lives with a staggering amount of debt. According to the non-profit advocacy group, The Project on Student Debt, students who take out loans to pay for school graduate owing an average of $19,000. A good number of those graduates and their parents hope that consolidating student loans will make things easier. If you are considering a student loan consolidation, there's a very important deadline coming up. Here to explain all is our personal finance contributor, Michelle Singletary. Michelle, welcome back. What is the date? What is happening?


Well, you need to consolidate by June 30th to take advantage of the low rates, because...

CHADWICK: That's the end of this month so it's really...

SINGLETARY: That's the end of this month.

CHADWICK: ...coming up. Well, what is this change in rates?

SINGLETARY: Well, most people have federal student loans. Those rates are variable, and they change effective July one. So the rate for Stafford Loans for students that are in school or in your grace period or a deferment will increase to 6.54 percent. That's up from the current 4.75 percent. So it's going to be a big jump if you don't consolidate before June 30th.

If you are already paying your student loan and you don't consolidate, the rate's going to jump to 7.14 percent. So you're talking almost a two percentage points jump in rates if you don't consolidate before July one.

CHADWICK: So why would people not consolidate? Why doesn't everybody do this?

SINGLETARY: Well, you know for one thing, some people can't if they've already consolidated. You can only do it once unless you have new loans, and someone may not meet the minimum that you need to have to consolidate. And, you know, some may be taking the bet that rates will go down, because for a long time, student rates did go down. Considering where rates are right now, I think it's a safe bet that rates are probably going to continue to rise. So if you've got a lot of student loan debt, you need to think about consolidating.

CHADWICK: Does this apply to kids who are still in school and are still taking out loans? They may have another year or two years to go? I mean, can they consolidate?

SINGLETARY: That's a great question. Listen, if you are in school, you can consolidate your student loans, even if you need to take out more loans. In fact, after July one, students that are in school will no longer be able to consolidate. So that's why that makes that June 30th even more important. If you are a junior or you've got, you know, just a little bit more time left in school and you've got a ton of debt, you want to do this before June 30th. Because after that, you won't be able to consolidate while you're in school.

CHADWICK: Michelle Singletary writes the syndicated column, The Color of Money. She's our regular guest for discussions of personal finance. Today, consolidating student loans. Thank you for that timely information, Michelle.

SINGLETARY: You're welcome.

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CHADWICK: Dear listeners, if you have questions about personal finance, your money questions, Michelle answers them right here. Go to our Web site, npr.org, click on the Contact Us link at the top of each page. You'll find e-mail to DAY TO DAY there. Just be sure to include the name Michelle in the subject line.


And you don't have to just have questions for Michelle. You can write to us about anything you've heard on DAY TO DAY. Again, you can go to npr.org and select the Contact Us link. Transcript provided by NPR, Copyright NPR.

NPR NewsEducation
Michelle Singletary
Michelle Singletary is the personal finance guru for NPR’s Day to Day, filing commentaries that can be heard every Tuesday. In conjunction with her work for NPR, Singletary writes the award-winning, syndicated “The Color of Money” column for the Washington Post and is a regular contributor to Howard University's evening news radio program, Insight, on which she discusses personal finance issues.