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According to http://ifap.ed.gov, the interest rate for Federal Consolidation Loans is, "The interest rate is the weighted average of the interest rates on the loans being consolidated, rounded to the nearest higher 1/8th of one percent. The interest rate may not exceed the maximum rate." (The maximum rate is 8.25%.) Nothing will change on July 1, 2008, other than interest rates for new Subsidized Stafford Loans will drop to 6%. I believe Mr. Howard may have been confused by the College Cost Reduction and Access Act that will reduce interest rates for Subsidized Stafford loans on a sliding scale over the next 4 years. Eventually the rate will be 3.4% for loans disbursed between July 1, 2011 and June 30, 2012. This may eventually reduce the interest rate slightly for those who Consolidate their student loans 4-5 years from now by reducing the interest rate for a portion of their overall loan balance, thereby reducing the weighted average. Sorry to be the bearer of bad, but more accurate news.
By Jennifer
