A secondary college loan provider advises former college students and their parents that they can avoid an expected jump in student-loan interest rates, effective July 1 by consolidating their loans prior to the first day of July. Student and parent borrowers with federal education loans can avoid the interest-rate increase.
“Consolidation loans offer interest rates that are fixed for the entire repayment term,” said Lorraine M. Teniya, director of SMS Hawai‘i, in a press release. “By consolidating now, borrowers can lock in interest rates that approximate the current low rates on federal student loans.”
SMS Hawai‘i is a corporation supporting higher education established in 1992 to ensure a continuous supply of private capital to meet the higher-education-financing needs.
Based on prevailing interest rates, the July 1 interest-rate increase on federal student loans could range between 1.5 and 2 percentage points. By consolidating their federal education loans, former students and parents can lock in a fixed interest rate, based on the current rates on their loans, rounded up to the nearest one-eighth of 1 percent.
Consolidation loans also offer the benefit of one convenient monthly loan payment and, depending on the total amount owed, the opportunity to reduce a borrower’s monthly payment by as much as half by extending the payback period.
In addition, borrowers who have at least one loan with SMS Hawai‘i may take advantage of the following interest-saving benefits on consolidation loans issued by SMS Hawai‘i:
• A 1-percentage-point reduction in the interest rate after borrowers make their first 24 monthly consolidation-loan payments on time.
• A quarter-point interest-rate reduction to borrowers who permit their consolidation-loan payments to be deducted automatically from their bank accounts.
“As a nonprofit organization, SMS Hawai‘i works to reduce the cost of paying for college for Hawaii residents and for other states’ residents who attended college in Hawai‘i,” Teniya said in the release.
For additional information about consolidation loans, visit www.smshawaii.org/consolidate on the SMS Hawai‘i Web site or call (866) 665-4363.