Survey shows 53% are unaware of opportunity to significantly reduce payments While locking-in historically low interest rates
FREDERICKSBURG, Va.--(BUSINESS WIRE via COLLEGIATE PRESSWIRE)--May 28, 2003--More than half of the graduating college seniors in the class of 2003 are unaware of the Federal Consolidation Loan Program, a program that would allow them to cut their student loan payments by up to 58%, according to a new Harris Interactive(R) survey released this week by Collegiate Funding Services (CFS).
The new variable rate on Stafford Loans - which is tied to this week`s final auction of the 91-day U.S. Treasury bills and expected to be announced by the Department of Education - has fallen to an unprecedented 2.82% for in-school grace borrowers and 3.42% for borrowers currently making payments.
Federal student loan borrowers can benefit from the new historically low rates by consolidating their existing variable rate federal loans into a single fixed interest rate loan through the Federal Consolidation Loan Program.
Despite the benefits of consolidation, awareness was low among students in the class of 2003 - 53% of graduating seniors surveyed were unaware of the Federal Consolidation Loan Program. This is almost identical to the findings of the CFS survey in June 2002, conducted by RoperASW of Princeton, NJ, which found that 54% of those surveyed were unaware of the Federal Consolidation Loan Program.
''The government developed this program to make repayment of student loans more manageable, yet most borrowers are unaware of its existence,'' said J. Barry Morrow, Chief Executive Officer of CFS. ''Consolidation is an easy and practical debt management tool because it costs the borrower nothing to consolidate, there is no pre-payment penalty, no credit check and student loan interest may be tax deductible.''
''Given the challenging job market for this year`s graduates, the new historically low interest rates should encourage more student loan borrowers to act quickly to consolidate, reducing their monthly student loan payments to more manageable levels,'' added Mr. Morrow.
Mr. Morrow said the average graduate with $17,000 in student loans could reduce monthly payments by approximately 38% by consolidating their loans into a single payment. Graduates who consolidate their loans during the ''grace period'' - the six month period typically following graduation - can lock-in on a limited time interest rate discount of up to 0.6%.
As an added benefit, CFS defers funding of applicants accounts until the end of their grace period so that they can lock-in the lower interest rate and still take full advantage of their ''payment free'' period. Recent graduates need to be aware of this important benefit when considering consolidation and can ask a CFS financial specialist for details.
Additionally, borrowers who consolidate with CFS can reduce their interest rates even further - up to an additional 1.25% - after 36 months by making their first 36 scheduled consecutive monthly payments on time, and having their payments automatically debited from their bank account.
Methodology
The survey was conducted online for CFS by Harris Interactive, a worldwide market research and consulting firm best known for The Harris Poll(R). The survey was conducted between April 22, 2003 and May 12, 2003 among 1,062 U.S. college seniors and college graduates. The results have a statistical precision of plus or minus 3 percentage points.
About CFS
Collegiate Funding Services, LLC is a leading nationwide provider of products and services that address a full-range of education finance and debt management needs. CFS has helped over a quarter million customers create and customize student loan repayment plans that suit their budget and financial goals. All lenders in the CFS Consolidation Loan Program are Equal Opportunity Lenders.
Headquartered in Fredericksburg, Va., and with satellite operations in Pinellas Park, Fla., as well as a wholly-owned servicing subsidiary in Ridgeland, Miss., CFS now employs approximately 1,100 individuals. For additional information, consumers may visit www.cfsloans.com or call 1-888-423-7562.
|
