Sallie Mae offers “best-rate” promise to customers considering federal student loan consolidation
Policy allows borrowers to lock-in best possible interest rate on existing variable rate student loans
RESTON, Va.,—Sallie Mae, the nation’s leading saving- and paying-for-college company, today announced that once again it will offer a “Best-Rate Promise” to customers applying for federal student loan consolidation. The Best-Rate Promise means that if Sallie Mae receives customers’ signed student loan consolidation applications before July 1, then the company will base the new consolidation interest rate on the pre-July 1 statutory interest rates or the new variable interest rate that takes effect July 1—whichever is better for the customer.
“This service will take the guess work out of when to apply for customers who have variable-rate Stafford and PLUS loans,” said Patricia Scherschel, vice president for loan consolidation at Sallie Mae. “Our Best-Rate Promise service is also available to recent 2007 grads who want to preserve their six-month grace period; if they apply before July 1, we will base their consolidation interest rate on the lowest variable rates available to them in 2007.”
Federal Stafford and PLUS loans first disbursed before July 1, 2006 charge variable interest rates that are set by federal formula and based on the last auction of 91-day U.S. Treasury bills in May. Interest rates on loans disbursed after that date are fixed at 6.8 percent (Stafford) and 8.5 percent (PLUS). Federal student loan consolidation has a fixed interest rate, based on the weighted average of the interest rates of the student loans being consolidated, rounded up to the nearest 0.125 percent or 8.25 percent, whichever is less.
When a student opts to consolidate their student loans, the consolidation lender pays off the student’s current federal education loans in full and creates a new loan, with a new interest rate and a longer repayment term. In addition to simplifying record-keeping and check-writing chores, consolidating student loans can reduce the monthly payment amount by up to 53 percent. That is because student loan consolidation stretches the repayment period from the standard 10 years to up to 30 years, depending on the amount of the education debt.
In addition to Sallie Mae’s Best-Rate Promise, student and parent customers who consolidate their Stafford, PLUS and other eligible federal education loans using a Sallie Mae Federal Consolidation Loan can reduce their consolidation interest rate by an additional 1.25 percentage points by making scheduled loan payments on time, and by using automatic debit to make payments electronically.
Customers can also opt to pay back student loans through Sallie Mae’s newest borrower benefit, Upromise Loan Link, which helps students and families save money for education expenses. When customers join Upromise for free, they can earn rewards on everyday purchases from participating companies and accumulate savings for college. The new Upromise Loan Link benefit allows Upromise members to automatically transfer Upromise Rewards savings to help pay down Sallie Mae student loans.
“If you’re graduating this spring, it is critical that you assess your loan repayment strategy to determine how you can best benefit from the options available to you,” said Scherschel. “Don’t be shy about calling for help. We can help you manage any loans going into immediate repayment. And, if loan consolidation is a good option for you, Sallie Mae’s Best-Rate Promise removes the stress of wondering when to apply.”
In addition, Sallie Mae will accommodate any customers who prefer to have their consolidation loans processed and disbursed prior to July 1.
More information about student loan consolidation is available at www.salliemae.com/consolidation. Additionally, customer service representatives are available at 800/448-3533 from 8 a.m. to 11 p.m. EST Monday-Friday and 8 a.m. to 5 p.m. EST on Saturday.
For more information contact:
Beth Guerard (703) 984-5621
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