T.H.E. is temporarily suspending our consolidation loan program due to adverse financial market conditions and legislative cuts. The combination of the financial market disruption and the legislative cuts effective October 2007 has significantly reduced our financial ability to fund these types of loans.
While consolidation has been a popular repayment option for students in the past, it’s not a critical repayment strategy at this time due to the introduction of fixed-rate Stafford loans and a relatively high rate on variable-rate Stafford loans. Interest rates on variable-rate Stafford loans, which reset every July 1, are also expected to drop significantly this July. That’s because the rate is based on the three-month Treasury Bill rate, which has decreased about 3% since July 2007.
Our hope is that market conditions improve well before July 1 so we can once again fund loans for these borrowers. With most borrowers best served by waiting until the end of their grace periods in late 2008, we have plenty of time for the market woes to subside.
We recognize that now more than ever, students need guidance to help them make the best decision when it comes to repayment. In order to meet this need, our experienced debt management counselors are available to help borrowers set up a repayment strategy that best fits their individual situation. Students can get in touch with a debt management counselor by calling 1-866-562-6672 or e-mailing debtmanagement@theloanprogram.org.