With interest rates climbing from historic lows, much confusion about federal student loan consolidation exists, so veterinary students and recent graduates are encouraged to speak with their lenders, as well as their college loan offices, about how best to manage their debt load.
Students and recent graduates can avoid paying more in the long run by consolidating their federal student loans, which fixes the interest rate to the current rate, said Fritz Wood, a CPA and certified financial planner who's dealt with veterinary economics for more than a decade
The standard payback term for traditional student loans is 10 years. But consolidation can extend the term to 30 years to pay off the debt at the fixed rate, resulting in reduced monthly payments, he said.
According to Wood, the personal finance editor for Veterinary Economics magazine, veterinary students and recent graduates should consider consolidating their student loans before the anticipated interest rate hike July 1 to lock in the lower rate.
Interest rates for federal student loans are currently at their lowest level in history: 2.875 percent, Wood explained. Rates are variable, however, and are adjusted annually every July 1. And although the new interest rate won't be known until then, indications point to a 1.64 percent increase.
"If a graduating veterinarian with an $80,000 debt load does not consolidate their student loans before July 1, it could be a $26,500 mistake," Wood said.