It’s time to consolidate your student loans

All good things come to an end, and that might be true in July when historically low interest rates on student loans are readjusted.

If current trends continue, the new rates on federal student loans could go up nearly 2 percentage points, some lenders say. It would be the first increase in five years.

For college seniors on the verge of graduating or borrowers repaying federal loans, there might be no better time to consolidate education debt. Doing so by June 30 can lock in today’s low rates for the life of the loan.

Each July, the variable rates on federal student loans are adjusted, based on the three-month Treasury bill auction at the end of May. Rates today are the lowest in the student loan program’s 40-year history.

Borrowers can switch to fixed rate by consolidating loans.

Because of the formula used in consolidation, the fixed rate can differ among borrowers and will be slightly higher than the variable rate. Essentially, the formula uses a weighted average of a borrower’s existing loan rates and rounds it up to the nearest one-eighth of 1 percent.

By consolidating now, borrowers repaying newer loans could secure a fixed rate of 3.375 percent. New graduates could receive a fixed rate of 2.875 percent by consolidating during the grace period, the six-months between graduation and when repayment kicks in.

Depending on the amount of debt, a borrower can extend the life of the loan from 10 years to as much as 30 years.

Consolidation is not just for students, either. Parents with a Parent Loan for Undergraduate Students (PLUS) also may consolidate debt, although at a higher rate than that of students.

Low interest rates aren’t the only reason to consider consolidating. Legislation pending in Congress would require that future consolidation loans be at a variable rate, a move that would save the government money but cost borrowers more if rates rose.

Universal default clause growing

Miss a couple utility payments and your lights go out. And your credit card interest rates might go up. And your auto and homeowner insurance might go up. You may not even get the job you thought you had in hand.

The practice of one creditor penalizing an account holder for paying another bill late has been around awhile, but now nearly one-third of all card issuers do it, experts say.

It’s called the universal default clause, and you’ll find it in the fine print enclosed in bills. Banks do it because they can, as there is no federal regulation other than they have to fully disclose it.

But credit counselors say many clients are entirely unaware that a boost in a credit card interest rate may be linked to unrelated bills.

“It’s become more prominent since credit cards have become more commonly issued to people with a variety of credit scores,” said Tracey Mills, spokeswoman for the American Bankers Association. “In the past only people with better credit scores got credit cards. People with lower credit scores are a greater risk.”

Quick grocery trips prevalent

Do you know what you’ll be having for dinner tomorrow?

If not, then you’re a typical American food shopper, according to research by Unilever.

The big food and consumer-products company tracked the shopping habits of 2,400 consumers and found that 62 percent of all food-shopping trips — almost two-thirds — are quick trips, a Unilever spokeswoman said.

The study found that quick trips were the dominant type of shopping trip made to all food retailers — supercenter stores and big-box discounters, as well as to neighborhood grocery stores and convenience stores.

Unilever is using the information to develop more products geared to the need for quick dinnertime meals.

Rules make EE bonds less attractive

Just as interest rates are beginning to rise, the federal government has changed the rules on its popular Series EE savings bonds, making them less attractive to small savers.

Starting May 1, EE bonds are being sold with a fixed interest rate for the 20-year life of the bond. For the past decade, the rate on these bonds were adjusted every six months, in May and November, so as rates rose, bond owners were rewarded with higher returns.

The government also changed the way it determines the interest rate on EE bonds. The rate on outstanding EE bonds sold before May 1 was tied to the yield on the five-year Treasury securities. The rate on bonds sold after May 1 is closer to the yield on 10-year Treasury securities.

The Treasury Department, which manages the government’s debt, emphasized that the new rules apply only to bonds purchased after May 1; the owners of outstanding EE bonds will continue to benefit from biannual adjustments.

Study: Moms with $131,471 a year

Being a mom is perhaps the toughest job of all.

Long hours, a multitude of job skills and tasks, no days off — even on vacation and sick days, moms are still on the clock. If stay-at-home moms received a salary for their work, they would earn an estimated $131,471 per year.

That’s according to a study by Salary.com. The Web site uses figures from human resources departments to analyze average salaries, bonuses and benefits.

The study took into account the average salaries of people who do some “mom duties” full-time: day-care center teacher ($26,891), van driver ($30,762), housekeeper ($18,750), cook ($31,099), chief executive officer, or CEO, ($612,623), nurse ($56,113) and general maintenance worker ($29,656).

Considering that mom spends about four hours a week as the family CEO, she’d earn an estimated $32,673 per year for that “job” alone. Working as the family daycare for about 72 hours a week, she’d earn an estimated $48,403 per year — including overtime.