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Drastic Student Loan Consolidation Changes In Proposed 2006 Federal Budget
On February 7, 2005, President George W. Bush submitted a proposed Budget of the United States Government: Fiscal Year 2006 to Congress. In the budget, President Bush made clear that funding programs for students in school such as the Pell Grant would take a higher priority than assisting students after they've completed their education. In the Office of Student Financial Assistance Budget, student loan consolidation has been earmarked for a cut from $34.7 billion to $25.3 billion, a loss of $9.4 billion. In addition, the 2006 Budget proposes three major changes to the student loan consolidation program:First and most important, the 2006 budget proposes replacing the fixed rate benefits of student loan consolidation with a variable rate formula equal to current loan balances. This would mean that students, currently locking in rates of 2.875%, would end up with variable rate loans that could reach as high as 8.25%, a potential 300% increase in rates.Second, the budget proposes allowing students to reconsolidate their student loans at a fee of 1% of their loan balance. For graduate and medical students, who often have loan balances of $100,000 or more, this could translate to reconsolidation fees of thousands of dollars; currently, students pay no fee for any kind of student loan consolidation.Third, the budget proposes doubling the fees that lenders are charged, from 0.5% to 1.0%. As lenders will need to absorb a doubling of their loan origination costs, benefits such as interest rate discounts offered to graduates may decrease or be eliminated. Additionally, because of the $9.4 billion proposed cut, lenders will need to search for ways to recoup the loss of federal funds, either by making consolidation requirements more stringent (i.e. requiring higher loan balances) or reducing benefits.With the number of sweeping changes proposed in the 2006 budget, and the possibility that the budget may be passed as written, graduates
and students graduating in 2005 are urged to file student loan consolidation applications as soon as possible. Student loan consolidation companies such as StudentLoanConsolidator.com are accepting applications immediately, and graduates who file their consolidation applications before Congress votes on the budget will be immune to any changes in the program. Christopher S. Penn, director of StudentLoanConsolidator.com, said, "Right now, with the lowest fixed rates in 39 years, generous discounts, no fees, no credit checks, and no penalties for early repayment, there's never been a better time to consolidate student loans. With the changes proposed in the 2006 budget, graduates would be able to save far less money, so the need to act now is very real."Students wishing to file a consolidation application should do so at http://www.StudentLoanConsolidator.com/pr/ or call toll-free (877) 328-1565 immediately.Sources: Budget of the United States Government: Fiscal Year 2006 (pages 362 - 381)Contact Christopher Penn at StudentLoanConsolidator.com by email at e-mail protected from spam bots for more information; to apply for a student loan consolidation, graduates should visit http://www.StudentLoanConsolidator.com/pr/ or call toll-free (877) 328-1565 as soon as possible.StudentLoanConsolidator.com is a service of the Edvisors Network, a multi-national education services company offering students options for managing the entire education life cycle, from getting into their college of choice to financing their education and beyond. The Edvisors Network is based in Quincy, Massachusetts, with offices in Quincy and London, England. Visit them on the web at http://www.EdvisorsNetwork.com for more information..
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