Act NOW To Save On Student Loans

Ray Martin: Speed Critical To Pay Less

(CBS)  Using a loan amount of $10,000 to be repaid over 10 years, to keep the math simple, Martin said: "You can lock in now, if you consolidate loans before June 30, at around 4.75 percent if you have Stafford loans. If you wait until after June 30, that rate is going to be almost two percentage points higher. The difference in the monthly payment is going to be $20 more, from $210 to $230. Over the life of the loan, you're going to pay $2,300 more in interest on $10,000 if you wait. If you do it now, you'll save $2,300. And this is just on $10,000 over a 10-year repay."

That could mean $23,000 less in interest paid if you leave school with $100,000 in student loans, Martin said.

He adds that current students also qualify.

"There is a once in a lifetime opportunity for students currently enrolled," he said. "They need to look at their Stafford loan eligibility now. If they borrow on a Stafford loan now, they get a low, variable rate. As of July 1, they're going to pay 6.8 percent fixed on a Stafford loan, two points higher. They can also consolidate all their loans while they're in school, while they're actively enrolled. They take the loans and consolidate those and lock in the low interest rate. And still stay on deferred status. So, you have a double play here, max out your Stafford loan eligibility before June 30, and consolidate all those loans before June 30, while actively enrolled."

Once someone decides to consolidate, who should they pick a provider?

"If you go to Google and type in 'student loan consolidation,' you get 40-and-a-half million hits," Martin said. "So, go with the lenders you currently have. If you have seven loans with five providers, shop each provider. They all have to offer the same low, fixed rate on your consolidation loan.

"But look one level deeper. Incentives. Sallie Mae will offer you one percent off your interest rate if you make 36 payments on time. Others will knock a quarter- or half-a-point off if you sign up for direct debit. If you have a large amount of loans, you get even a better deal. Shop each one on the incentives, because they can save you hundreds of thousands of dollars, as well. Shop around.

"And again, the key is to do all this this month: If you wait 'till after that, it's too late."