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Release: Immediate

UI administrator advises students to check out lower federal loan rates

IOWA CITY, Iowa -- A new federal law gives students and college graduates an opportunity to reduce their loan payments by refinancing their student loans at lower rates, but they'll have to act quickly.

That's the message from C. Peter Magrath, president of the National Association of State Universities and Land-Grant Colleges, who said in a recent on-line news release that the new law -- the Higher Education Amendments (HEA) of 1998 -- allows student loan holders to apply for a consolidation loan from the Department of Education's Direct Loan Program at an interest rate of 7.46 percent, provided they apply by the Jan. 31, 1999 deadline. The Department of Education estimates that most students consolidating loans will save about $500 for every $10,000 of debt on an average 10-year loan.

Mark Warner, director of the UI Office of Student Financial Aid, said that the new law could benefit many of the more than 10,000 UI students who annually borrow through the Federal Direct Student Loan Program.

"This new law potentially benefits currently enrolled students who have borrowed through the Federal Direct Student Loan Program prior to the 1998-1999 academic year and have not borrowed through any other federal loan programs," he said. "Also, former UI students who have borrowed through the Federal Direct Student Loan Program can refinance even though they may have outstanding federal loans beside the Direct Loan."

Loan holders can obtain more information and an application by contacting the Department of Education Direct Loan origination center at or 800-557-7392.