Meharry Loan Consolidation Primer

3. Current proposed legislation might change the consolidation program to a more expensive variable rate program with a fixed-rate option. The fixed rate option would be set at one percentage point above the prevailing variable interest rate in addition to charging a 0.50% fee for electing the fixed rate option. Monthly payments will balloon and according to Rep. Chet Edwards a member of the U.S. House of Representatives, Appropriations and Budget committees, the proposed legislation “could add $5,000 to $28,000 to the cost of college student loans.” According to Dr. Charles Young, president emeritus of UCLA, the present 5.3% in-repayment rate for consolidating federally insured student loans would increase to 7.18%; a 35% increase in the loan rate. For a $40,000 loan over 25 years, the student tax would add $13,932 to total loan repayments.