Last Chance for Recent Grads to Lock in Low Rates on Student Loan Consolidation

RESTON, Va., Nov. 6 /PRNewswire/ -- With the date rapidly approaching when many recent graduates will begin repaying their student loans, now is the time to weigh the benefits of loan consolidation and act soon. Many customers who apply to consolidate their federal student loans before the end of their six- month, post-graduation grace period can lock in a rate of 6.625 percent, says Patricia Scherschel of Sallie Mae, the nation's leading provider of saving- and paying-for-college programs and the No. 1 provider of consolidation loans.

Students have until the end of their 180-day post-graduation grace period to apply with Sallie Mae and lock in a rate based on the "grace rate" on their variable-rate Stafford loans -- currently 6.54 percent for Stafford Loans issued July 1, 1998, through June 30, 2006. Once the grace period ends, the variable Stafford rate will rise to its current repayment rate of 7.14 percent. Applying after the grace period ends means locking in a rate of 7.25 percent, as shown in the table below.

         If Customer          Stafford          And Consolidation*
       Applies During:        Rate Is:            Rate Would Be:

           Grace               6.54%                  6.625%
         Repayment             7.14%                  7.25%

      *The consolidation rate is the weighted-average rate of the loans
       being consolidated, rounded up to the nearest 1/8th of a percent.

Student loan consolidation also allows customers to manage repayment by combining their eligible federal loans into a new loan with a fixed rate, a single monthly payment, and a lower monthly payment amount. Consolidation can reduce a customer's monthly payment by extending the payback period to as long as 30 years and reducing their monthly payments by up to 45 percent. Borrowers can obtain even greater monthly payment reduction by opting for a graduated repayment plan. There are no prepayment penalties and no application fees.

"We're pleased to offer additional loan discounts that help customers minimize their interest expense. Customers tell us that they want to pay off their student loans as fast as they can," says Scherschel. "Sallie Mae's benefits can also help them stop making payments years ahead of schedule."

For example, a 2006 graduate who consolidates $20,000 in Stafford Loans at the in-grace rate of 6.625 percent can lock in a monthly payment of $151. Electing to make payments via direct debit allows the customer to immediately drop the rate to 6.375 percent. Furthermore, by making the initial 36 payments on time, the customer can reduce the interest rate to 5.375 percent. By always making on-time payments via automatic debit, the customer can save about $4,400 in interest and reduce the 20-year repayment term by nearly two and one-half years.

As of June 15, customers may consolidate with any lender that offers Federal Consolidation loans. When picking a consolidation lender, consumers are encouraged to keep in mind that they are signing up for a long-term relationship. Sallie Mae advises consumers to look for a lender that can offer assurance of long-term commitment to servicing student loans, which have special deferment and forbearance benefits. In addition to providing money- saving benefits, Sallie Mae offers other benefits to consolidation customers, including a Web-based application with electronic signature and a complimentary concierge service that pre-fills the consolidation application. These services help customers apply quickly and easily before their grace period expires. Sallie Mae also offers a low minimum balance -- just $5,000; benefits can be earned on balances of $7,500 or more.

Sallie Mae offers free counseling and advice to help consumers determine if consolidation is best for them. Those interested in federal student loan consolidation can call 800/448-3533, Monday through Thursday, 8 a.m. to 8 p.m., Friday 8 a.m. to 5 p.m. E.T., or visit http://www.salliemae.com/consolidation. If customers are not sure about the status of a consolidation application, they may call Sallie Mae at 800/448-3533. Additional information is available online at http://www.salliemae.com/consolidation.

SLM Corporation (NYSE: SLM) , commonly known as Sallie Mae, is the nation's leading provider of saving- and paying-for-college programs. The company manages $137 billion in education loans and serves nearly 10 million student and parent customers. Through its Upromise affiliates, the company also manages more than $11 billion in 529 college-savings plans, and assists more than 7 million members with automatic savings through rebates on everyday purchases. Sallie Mae and its subsidiaries offer debt management services as well as business and technical products to a range of business clients, including higher education institutions, student loan guarantors and state and federal agencies. More information is available at http://www.salliemae.com/. SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America.

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