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Feb 1, 2007

Borrowers can save money by not consolidating loans

Federal Loan Consolidation May Not Benefit All Student Borrowers

WILMINGTON, Del., Feb. 1 PRNewswire — Federal loan consolidation is an option that may help borrowers manage repayment of their federal student loans, particularly if they still have Federal Stafford/Direct Loans with variable interest rates. But, consolidation may not be right for all borrowers, particularly for those who now only have federal student loans with fixed interest rates. According to Jeffrey E. Hanson, director of borrower education services at Access Group, a nonprofit student loan provider, "Borrowers may be able to save money both in terms of their monthly loan payment and in the total amount they pay if they do not consolidate their fixed rate Federal Stafford/Direct and Federal PLUS loans."

There are three primary reasons why borrowers should weigh the benefits and costs before rushing into consolidation. First, Federal Stafford/Direct Loans first disbursed on or after July 1, 2006, have fixed interest rates. Thus, the fixed interest rate structure of the Federal Consolidation Loan provides no advantage to borrowers who have these new fixed rate loans. Second, many graduate/professional student borrowers likely now qualify for the Extended Repayment option on their Federal Stafford/Direct and Federal PLUS loans. That option provides a 25-year repayment period, thereby allowing borrowers to reduce their monthly loan payment without having to consolidate. And most importantly, many lenders now offer on-time payment incentives on Federal Stafford and Federal PLUS Loans that are more beneficial financially than those offered on consolidation loans.

To see examples illustrating how borrowers can save money by not consolidating and to learn more about the pros and cons of the Federal Consolidation Loan program, go to FederalConsolidation.Org.

About Access Group
Access Group is a nonprofit organization that has specialized in providing graduate and professional student loans for more than 20 years. Its products include federally guaranteed (FFELP) loans and private loans for students financing their law, business, medical, dental, health, and other graduate degrees. Access Group also creates custom loan options and university-wide programs for schools to meet the unique needs of their students. The company offers flexible repayment options for all loans, as well as the Federal Consolidation Loan program. Access Group also provides borrower education materials and need analysis services for students and financial aid administrators. For more information, visit

SOURCE Access Group

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