A new graduate with $20,000 worth of student loans and a 20-year term would rack up an additional $4,371 in interest over the life of the loan if subject to this year's projected interest rate increase. Consolidating those loans now at the current rate of 2.875 percent could save eligible borrowers thousands of dollars.

"For college seniors the next few weeks will be hectic while they prepare for graduation," said Cheryl Watson, Nelnet Chief Communications Officer. "However, it is important that they find a few minutes to learn about student loan consolidation before rates change. With a little extra time, students can save thousands of dollars."

Student loan borrowers can lock-in the current low rates by consolidating their student loans before July 1. Borrowers in their grace period can receive a fixed interest rate as low as 2.875 percent, and borrowers in repayment can lock-in a rate as low as 3.375 percent. For most new and recent graduates, this week's 91-day T-bill bond equivalent rate of 2.91 percent would send Consolidation loan interest rates up to 4.625 percent and 5.25 percent, respectively. The T-bill rate used to calculate the current student loan interest rates was only 1.07 percent based on the May 2004 auction.

Through consolidation, borrowers can combine multiple federal student loans, such as Stafford loans, into one loan with one low monthly payment. The Consolidation loan fixed interest rate is determined by taking the weighted average of the interest rates of the original federal student loans, rounded up to the nearest 1/8 percent.

Nelnet is allowing new graduates who apply to consolidate immediately after graduation to keep their six-month grace period. This gives them the opportunity to capture the current low rate without forfeiting their six-month grace period before they begin repayment.

In addition, Nelnet offers valuable benefits to borrowers, including a choice of a one percent interest rate reduction after 36 consecutive, uninterrupted payments or a 3.33 percent reduction to loan principal applied after 30 consecutive, uninterrupted payments. Borrowers can also receive a .25% interest rate reduction for auto-debit payments. Together, these Nelnet borrower benefits can save hundreds and possibly thousands of dollars in interest over the life of the loan.

The variable interest rate on most federally-guaranteed student loans is readjusted annually based on the final 91-day T-bill auction prior to June 1 and is effective July 1. This year the auction determining the new rates will be on May 31. The formula is equal to the bond-equivalent rate for the T-bill plus an interest rate margin set by the Department of Education. The add-on for loans disbursed on or after July 1, 1998 is 1.7 percent for borrowers with Stafford loans in school, grace, or deferment; 2.3 percent for borrowers with Stafford loans in repayment; and 3.1 percent for PLUS loans for parents.

"It is a great debt management tool," added Watson. "The low rates and one monthly payment are a great combination for new graduates on a tight monthly budget. It is hard to imagine a scenario where a borrower would not benefit from consolidating before July 1."

More information regarding student loan consolidation is available at www.nelnet.net/consolidation or by calling toll-free at 1.866.4CONSOL (426.6765).

Nelnet is one of the leading education finance companies in the United States and is focused on providing quality student loan products and services to students and schools nationwide. With more than $14.5 billion in student loan assets, Nelnet originates in excess of $3 billion for itself and its service partners annually, and its servicing software is used by approximately 35 clients, including Nelnet, to service more than $50 billion in student loans. Nelnet ranks among the nation's leaders in terms of total student loan assets.

Nelnet offers a broad range of student loan and financial services and technology-based products, including student loan origination and lending, guarantee servicing, and a suite of software solutions. Our products are designed to simplify the student loan process by automating financial aid delivery, loan processing, and funds disbursement. Our services help to facilitate and streamline education finance for all involved in the industry, including student and parent borrowers, lenders, financial aid officers, guaranty agencies, governmental agencies, servicers, and the capital markets.

Additional information is available at www.nelnet.net.

Source: Nelnet

CONTACT: Media, Sheila Odom, +1-402-458-2329, or Investors, Cheryl
Watson, +1-317-469-2064, both for Nelnet

Web site: http://www.nelnet.net/
/Web site: http://www.nelnet.net/consolidation