SOURCE: NextStudent

August 29, 2007 09:10 ET

Student Loan Borrowers Urged to Contact Members of Congress

Pending Legislation Could Lead to Rate Reduction Benefits Being Withdrawn

PHOENIX, AZ--(Marketwire - August 29, 2007) - Pending federal legislation* could force federal student loan providers like NextStudent, a leading Phoenix-based education funding company, to eliminate the discounts and other benefits they currently offer to students and parents who take out federal student loans. NextStudent encourages student loan borrowers and their parents to contact their Congressional Representatives and Senators as soon as possible and urge them to oppose the student loan program cuts contained in the College Cost Reduction Act of 2007.

These cuts, which could also lead to a reduction in the number of lenders willing to offer federal student loans, could go into effect as early as October 1, 2007. If that happens, NextStudent will only be able to offer its current interest rate reduction benefits to borrowers whose federal student loans are funded before October 1. Borrowers who apply for a federal education loan after August 31, 2007 are highly unlikely to have their loans funded in time to take advantage of the current NextStudent discount benefits.

Viewed by some as the deepest cuts in the history of the federal student loan programs, the proposed cuts could slash $19 billion in government support for education loans. Versions of the bill have already passed both the House of Representatives and the Senate.

With the proposed cuts, students and parents whose loans are not funded by October 1 could lose out on NextStudent discount benefits that are currently available on all federal education loans, including Stafford, PLUS, Grad PLUS, and Consolidation loans:

--  An immediate 0.25% rate reduction just for signing up to have loan
    payments automatically deducted from a savings or checking account
--  A 1% rate reduction after 36 on-time payments -- and NextStudent locks
    in this rate reduction for the life of the loan, even if a borrower misses
    a payment later on
--  OR a 2% rate reduction after 48 consecutive on-time payments

NextStudent rate reduction benefits can add up to a 2.25% rate discount on a federal education loan -- but NextStudent will not be able to afford to continue offering those benefits if this legislation passes.

NextStudent urges college students, graduate students and parents to take action to help stop this legislation before Congress passes a final bill. Concerned borrowers should contact their Congressional Representatives and Senators today.

* NextStudent will discontinue the interest rate discount benefit plan described above if Congress enacts the College Cost Reduction Act of 2007 or similar legislation. Provisions within that legislation would change the fee structure and yields for lenders that make federal education loans. It is not known at the time of this printing on which date the new provisions will take effect, nor whether they would be applied to federal education loan applications that had been submitted prior to that date but not yet funded. However, it appears likely that the legislation will affect loans funded on or after October 1, 2007. NextStudent will not offer the interest rate discount benefits described above for those federal education loan applications that are subject to the new provisions. NextStudent will make its best efforts to expeditiously process all federal education loan applications it receives prior to August 31, 2007, but cannot guarantee that any particular application will be processed in time for the interest rate discount benefits to apply.

About NextStudent

NextStudent, Federal Lender Code 834051, is dedicated to helping students and their families find affordable ways to pay for college. NextStudent offers one-on-one education finance counseling and has a portfolio of highly competitive education finance products and services, including a free online scholarship search engine, federally guaranteed parent and student loans, private student loans, both federal and private student loan consolidation programs, and college savings plans.

For more information about NextStudent and its student loan programs, please visit the company's website at

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