In the past three years, 4,653,000 former students consolidated their federal student loans through the Federal Family Education Loan Program (FFELP), according to NextStudent, the Phoenix-based premier education funding company. This happened largely because of the sizable discounts given to borrowers such as a 1 percent interest rate reduction due to on-time payments.

However, these discounts, representing literally thousands of dollars in potential savings to students and their parents, may be eliminated if such current legislation as the Student Relief Act (H.R. 5) and Sunshine Act become law. The legislation proposes to double the fees the government charges FFELP lenders. This would result in a large number of lenders competing for a smaller share of the market at a higher cost, most likely leading to a reduction in customer service, the inability to offer discounts to students, and the disappearance of many lenders.

The elimination of such a seemingly small 1 percent discount could have detrimental effects over time on a borrower's student loan portfolio and savings. For example, an individual who consolidated $30,000 in federal student loans last year through a FFELP lender such as NextStudent would save $3,513 over a borrower who consolidated through the government's Federal Direct Lending Program. Unfortunately, borrowers no longer would have the option to choose a FFELP lender and thus save thousands if the new legislation goes through.

With the Student Relief Act and the Sunshine Act, colleges are given incentives to use the government's Federal Direct Lending Program over the Federal Family Education Loan Program, which has provided such student loans as the Parent Loan for Undergraduate Students (PLUS) and Graduate PLUS loans, Subsidized and Unsubsidized Stafford Loans, and Federal Student Loan Consolidation for years. If these bills are passed, FFELP lenders likely would disappear and the 40-year track record of providing excellent service and secured low-interest student loans would go with them.

It is a wise decision for borrowers to consolidate their federal student loans now, while they still can take advantage of savings that may not be available in the near future. NextStudent offers one of the most aggressive incentives in the industry: a 1 percent LOCKED discount for THE ENTIRE TERM of the loan, after 36 consecutive on-time payments. This incentive remains in place until the balance is paid. This discount, which may not be available for much longer if the new legislation is successful, amounts to thousands of dollars in savings for borrowers.

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.

The NextStudent Scholarship Search Engine, one of the nation's oldest and largest scholarship search engines, is updated daily, available free of charge, completely private -- and represents 2.4 million scholarships worth $3.4 billion.