Summary: Lower Interest Rates for Some Direct Consolidation Loans
Author: ODAS - Office of the Deputy Assistant Secretary - SFA
Posted November 2, 1998
TIME SENSITIVE ANNOUNCEMENT
SUBJECT: Lower Interest Rates for Some Direct Consolidation Loans
I would like to alert you to an important opportunity for some student loan borrowers.
As you know, on October 7, President Clinton signed the Higher Education Amendments of 1998. Under the new amendments, borrowers who apply for a consolidation loan from the Direct Loan Program before February 1, 1999, will receive an interest rate that is based on the 91-day Treasury bill rate plus 2.3 percentage points. For borrowers who apply now, the interest rate will be 7.46 percent. The interest rate is variable and re-computed annually on July 1.
To be eligible to consolidate loans at this time, a borrower who is enrolled or accepted for enrollment in an institution of higher education may not have Federal Family Education Loan Program loans or Federal Perkins Loan Program loans. Note: This restriction expires on January 31, 1999.
Attached is a question and answer sheet, which addresses questions you may have concerning borrower eligibility for Direct Consolidation loans. This information is available on the Direct Loan web site at http://www.ed.gov/DirectLoan and on the ifap (Information for Financial Aid Professionals) site at http://ifap.ed.gov.
Students may apply for a Direct Consolidation Loan electronically or download an application from http://www.ed.gov/DirectLoan. They also may call the Loan Origination Center at 1/800/557-7392 and request an application.
Because this is a valuable, but time sensitive, opportunity for some borrowers, I encourage you to share this information as broadly as possible with your students.
Diane E. Rogers
Acting Deputy Assistant Secretary
Student Financial Assistance Programs