Student loan rates going up. What you should do now.

The whole student loan market is, as the Wall Street Journal points out in an artcile on June 15th, very complicated. But here are some things for you to consider.

After July 1, so-called “Stafford loans,” which are loans taken out by students, will change from a variable rate to a fixed rate of 6.8%, while PLUS loans, which include the parent loans for undergraduate students, will move to a fixed rate of 8.5%.

These rates are a cap placed on these loans by the federal government. Nothing prevents lenders from offering lower rates, but some of the biggest lenders — like Sallie Mae, Citibank and JP Morgan Chase — intend to set their rates at the maximum.

You can do better if you shop around, but the terms are very confusing. One lender offers a 1% discount, for example, but if you miss even one payment your rate goes up to the max and stays there.

One lender claims that because of lower costs, it can offer lower interest rates and intends to lower them further later. They are called “My Rich Uncle” and their rates are 5.8% for Stafford and 6.75% for PLUS.

You might want to check them out. But in any case make sure you review this carefully and do any consolidations before July first.

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