A personal finance blog dedicated discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance.


Friday, April 01, 2005

Student Loan Interest is on the Rise

Aleksandra Todorova over at wrote an excellent article entitled Student Loans Get More Expensive.

In the article she does an excellent job explaining how the interest rate on student loans in calculated and why it is expected to rise this summer by as much as 1.5 to 2%. Here's an excerpt:

"Interest rates for Stafford and PLUS loans are reset each July 1, based on the 91-day T-Bill rate determined at its last auction in May. Last year, the T-bill hit a rock-bottom 1.07%. Stafford loans for students in repayment were at 3.37%. After a series of Federal Reserve interest rate hikes since then, however, the T-bill is expected to approach 3% in May. At its latest auction in March, it traded at 2.84%. The Stafford loan rate, were it to be set today, would be 5.14%."

The bottom line to this: if you have student loans that you want to consolidate, you better do it now.