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Don't miss out on loan deals

Looking to cut college costs? Borrowers have until July to consolidate student loans and save thousands of dollars in financing. Students and parents should check it out.

Beginning July 1, the interest charged to existing variable rate Stafford and PLUS loans will increase nearly two percentage points because of a wrong-headed cuts in financial aid by Congress. That will increase the cost of financing by 30 percent to 40 percent. But borrowers can lock-in their lower rates with a Federal Consolidation Loan. For a typical graduate with $20,000 in debt, the move could save $3,000 or more over the life of the loan.

Meanwhile, there are other efforts to help college graduates, who leave campus with an average debt that has more than doubled over the past decade. The Project on Student Debt, backed by several charitable trusts, has asked the U.S. Department of Education to rewrite its rules so that more graduates with huge loans and modest salaries can get a break on interest, have loan payments capped at 15 percent of their discretionary income, and have some debt forgiven if they make regular payments for 20 years.

But those reasonable regulatory changes could take months, and borrowers should focus on the more immediate issue. They may consolidate two or more loans from among a dozen federal programs. Applying is free and the costs are cheaper for those who pay by electronic debit or who have good repayment histories. Ask your lender or research online, at ed.gov, salliemae.com or another reputable site. And remember: July's the deadline.

[Last modified June 9, 2006, 06:08:37]