Student Loans, Politics, and You — How Recent Changes in Legislation
Can Affect You

On February 8, 2006, President Bush signed into law S1932, the Budget Reduction Act of 2005, with several provisions affecting student loan consolidation. Effective July 1, 2006, the new law establishes a higher fixed interest rate and, by closing several loopholes, limits the types of student loans that can be consolidated.

This just in! Interest rates will jump by nearly 2 percentage points on July 1, 2006. See official 2006 student loan interest rates here!

That's why we say: If you're thinking about consolidating or reconsolidating your student loans, please do it now to take full advantage of today's consolidation laws while you still can.

Specifically, effective July 1, 2006, the new law:

•  Eliminates spousal loan consolidation
•  Eliminates in-school consolidation
•  Increases minimum consolidation interest rates to 6.625% (a dramatic increase vs. today's low rates)
•  Retains the single holder rule Single Holder Rule Repealed!
•  Eliminates reconsolidation of previously consolidated loans*

* This provision is currently in limbo:

News Flash! On June 15, 2006, Single Lender Rule Repealed!
President Bush signs bill into law!
The outcry over the single lender rule
The single holder rule states that if your student loans are all with one lender, you do not have the right to consolidate with anyone else of your choosing. This doesn't sound fair to either you or us, does it?

Apparently, members of Congress are starting to agree that this long-standing rule is not in the best interest of students or their parents who are saddled with student loan debt. As a result, the House of Representatives has just submitted the “College Access & Opportunity Act” (H.R. 609) that would eliminate the single holder rule. Click here to read this pending legislation.

We hopeful that this latest legislative move will result in a more fair and more competitive approach to student loan consolidation that benefits you, the borrower.

Reconsolidation of previously consolidated loans (Yes? No? Stay tuned!)
News Flash! OneSimpleLoan files lawsuit against the Department of Education (DOE), requesting that the DOE extend the reconsolidation deadline to June 30, 2006! As your student loan advocate, OneSimpleLoan has taken the lead in asking the government to give you more time to consolidate previously consolidated loans. Watch this space for further details!

All of us in the student loan industry thought we had until June 30, 2006 to reconsolidate your already consolidated loans, not only to lower your interest rate but also to refresh your deferment or forbearance options.

Yet the guidance we had received from the Department of Education indicated that the industry had until June 30th, 2006 to complete the process of reconsolidating previously consolidated loans. This new law has severely shortened the deadline.

On Friday, March 17, 2006, prior to Congress going on break, the Department of Education issued a "Dear Colleague" letter stating a new deadline date of Friday, March 31, 2006. Under these conditions we, nor anyone else in the student loan industry, will be able to complete a re-consolidation in that short amount of time, as it usually takes at least 30 days to complete the first step.

Like you, we are very disappointed in the Federal Government's decision to push up the deadline date. Rest assured, we and everyone in the FFELP community have already begun petitioning the legislators to reconsider the impact of their decision.

Already there's a flurry of legislative activity going on now to extend this deadline.  Please continue to check back with us to stay up to date on these laws that affect you and your wallet!