Deadline looms for student loans

The window is closing for Utah college students to save on education loans as a July 1 deadline looms for higher interest rates and new loan policies.

A federal law passed last month will boost education loan rates to a fixed 6.8 percent this summer, up from the current 4.7 percent variable rate now offered to students still in school.

While all new loans will carry the higher rate, even students with existing loans will see a sharp increase in July with an expected jump in variable rates to more than 7 percent, said David Feitz, associate executive director of the Utah Higher Education Assistance Authority.

"The window goes away after the first of July. Don't delay this. This is something you need to act on now," Feitz said. "It's the last chance to get this. Who knows when we're going to get these low rates again."

If students consolidate existing loans now under a lower fixed rate, they could save an average of $1,300 on a 10-year loan, Feitz estimated. The average Utah student debt for a four-year degree is pegged at around $15,000.

The tweaked law also eliminates provisions allowing students still in school to consolidate loans, a benefit an increasing number of Utah students have chosen with fixed rates and lower monthly payments, he said.

"It's sort of an act-now message. Make sure you get the application in here — I mean in the door and in our hands — by the close of business on the 30th of June," Feitz said.

To get that message out, Feitz said UHEAA leaders are sending out mass mailings giving details of the new loan policy to every Utah student borrower who hasn't yet consolidated their loans.

Most students are still unaware of the pending deadline and don't realize they will be locked into higher rates, said John Curl, director of financial aid at the University of Utah.

"We haven't had a whole lot of students ask questions about it — that's the unfortunate thing," he said. "When it changes in July, that will be when they start to recognize it."

Curl added he expects a rush of students to the financial aid office in the spring once advertisements start showing the new, fixed 6.8-percent rate.