New Student Loan Consolidation Program
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Borrowers flooded the Dep. of Education and lenders with phone calls as they rushed to beat the cut off point to consolidate student loans before IRs rise. The variable interest rate on federal study loans will rise virtually two percentage points after midnight Thursday. Some borrowers could save thousands of greenbacks over the lives of their loans by consolidating at the lower rate. The strangely sudden rise has prompted a wave of last-minute inquiries, causing back-ups for banks ‘ 800 numbers and at the Office of Education’s Direct Loan Servicing Center, where at least some calls weren’t getting thru Wednesday. Office spokesman Susan Aspey encouraged borrowers to file electronically — the department added 9 Web servers for extra traffic — or to call at off-peak times. The center will remain open until midnight Pacific time Thursday. Borrowers can generally apply for Student Consolidation Loan online, but the method can be tricky and they regularly finish up phoning lenders with investigations. “The volume is tremendous,” related Jennifer Darwin, a spokesman for Charlotte, N.C.-based Wachovia Company, which said call volume was up 51 p.c compared to a year ago. A spokesman for Charlotte-based Bank of america announced callers can expect to be on hold an hour or even more, even though the bank has added staff to field calls. Other companies related their preparations worked. Mark Brenner, president of San Diego-based College Loan Corp, said 97 percent of calls were being answered within 30 seconds. At Collegiate Funding Services in Fredericksburg, Virginia, executive vice chairman Clark McGhee said most questions were being answered, thanks to extra staff and overtime, in spite of numerous times the common volume. Pennsylvania’s Higher education Assistance Agency had managers answering calls, which were at more than twice the common volume. Some lenders showered scholars with reminders encouraging them to consolidate, nevertheless it did not forestall a last-second rush. “You’d be surprised how many scholars out there haven’t any idea what IRs have been doing and what it means for them,” expounded Matthew Steingraber, vice chairman of selling at Educational Finance Services in Tampa, Florida, where volume is about fifty percent higher than normal. “A lot of them don’t realize they have options.” Still, consolidation is a risk. Interest rates have been at all time lows, but if they were to eventually drop far more, scholars might regret locking in at a higher rate. www.studentloanandconsolidationonline.com