From Grand Forks Herald:

Especially in a stressed economy, student loan debt is a major issue. It’s not uncommon to see students saddled with thousands in loans for undergrad and graduate school costs.

Sallie Mae is one of a number of lenders that issue federal student loans. During fiscal 2007-08, the U.S. Department of Education said 14.8 million federal student loans were issued, totaling $68.2 billion. Sallie Mae, a private student lender, is currently managing a total of $178 billion in loans for 10 million customers, many of whose high interest rate is pretty well locked in.

Congress sets the terms on federal student loans for Sallie Mae and other private lenders, such as banks or credit unions. Loans can be consolidated, but once that’s done the interest rate is set.

“Often, Sallie Mae faces cases like this where we’d love to be able to help,” said Conwey Casillas, a Sallie Mae spokesman. “But by law, we’re not given that option.”

What’s especially frustrating for student borrowers is the wide disparity in interest rates. Because they’re pegged to Treasury bill rates, interest rates on federal student loans dipped as low as 2.8 percent in 2004-05. Currently, rates on Stafford loans like McMenamin’s are set at 6.8 percent (6 percent for those with documented financial need.)

Casillas and others acknowledge that the variable rates have created “inequality” among holders of student loans.

But Sallie Mae and other federal loan lenders do offer ways to lessen the monthly burden.

Borrowers …can lower their monthly payment - sometimes by half. Or they can request an extension on the standard 10-year repayment terms.

Full Story Here:

http://www.grandforksherald.com/articles/index.cfm?id=102867