During his undergraduate tenure at the University of South Carolina Aiken, Wesley Riddle didn't think much about the $10,000 in student loan debt he was racking up.
Now, with a fresh communications degree in hand, the 22-year-old North Augusta native is more concerned with money as he works a summer job and prepares to move back home to save for graduate school in the fall.
On top of that, a recent letter reminded him of the $120 a month he'll have to start paying on his federal loans.
"Ever since I got that information in the mail from the Stafford loan, it's been something that's been on my mind for after grad school," he said. "It's going to be another bill."
Because Mr. Riddle expects to pay for graduate school through a work-study program, he might consider consolidating his undergraduate bills and taking advantage of the lowest federal loan rates in the history of the program.
Based on Wednesday's announcement of interest rates for short-term Treasury bills, Stafford loan rates will fall to 3.42 percent for loans issued after July 1998. The figure, which is down from the current 4.09 percent, takes effect July 1.
Three years ago the rates were 7.59 percent, and the steady decline has led more graduates to loan consolidation, a one-time chance to shave interest payments by affixing current rates to the loan.
"The students that really are going to take advantage of this are the graduating students who can consolidate and lock-in fixed rates," said John Powell, the Medical College of Georgia's financial aid director.
About 70 percent of MCG students seek loans, many of them carrying loan debt from their undergraduate schooling. As a result, the average medical school student there graduates with nearly $75,000 of debt, and the average dental school student leaves with almost $73,000.
Debt levels nationwide have risen for college students as tuition and fees continue to increase. During 2002, college students borrowed $32.7 billion in federal loans, up 16 percent more than the year before, according to the U.S. Department of Education.
"Ever since two years ago, the activity around consolidating loans has grown," said Mark Brenner, the general counsel for the lending company College Loan Corporation. "For this year's graduating class, consolidating their loans during their grace period presents an incredible opportunity."
Recent graduates who consolidate during their six-month repayment grace period might lock in interest rates at 2.875 percent.
Glenn Shumpert, financial aid director for USC Aiken, called the low rates a benefit for most students but warned graduates against signing up without considering the impact consolidation might have on borrowers' benefits with existing loans.
"It's best for them to make the comparisons before they sign on the dotted line," he said. "Every graduate has their own circumstances."
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