Student loan interest rates are currently higher than in many countries, including many in the U.S., but a new report from the Institute for College Access & Success (ICAN) finds that there is room to cut student loan interest payments and consolidate loan repayment plans.
The report is based on data from the Federal Student Aid Data System (FSADIS), a program that collects and distributes data on federal student loan borrowers.
According to the report, about 80% of student loan payments made in 2015 were made on student loans, compared with about 55% in 2010.
But the report found that the rates for consolidation are actually higher than they were in the past, as the consolidation program is more expensive.
The consolidation program allows borrowers who have paid all of their federal student loans to consolidate their debt into smaller loans with lower interest rates.
The average consolidation fee is currently $1,000.
The Federal Reserve notes that these consolidation fees were historically high.
In 2008, for example, consolidation fees for student loans ranged from about $5,000 to $17,000 for loans with a total of about $100 billion in outstanding debt.
The cost of consolidation in 2016, however, is estimated to be between $1.5 billion and $2.5 million, according to the Fed.
The analysis found that consolidation rates were higher in many U.s. states, as students could consolidate their loans with their parents.
California had the highest consolidation rates for student loan debt at 35%, followed by Maryland (29%), Connecticut (22%), Rhode Island (20%), and New York (18%).
California, where consolidation fees ranged from $1 million to $10 million, was also the state with the highest default rate for student debt at 22% for those with federal loans.
A report released in March by the National Consumer Law Center found that a third of Americans with student loans did not receive the federal Pell Grant, which can be used to help students pay for school.
The National Consumer League, which advocates for consumer rights, notes that the average Pell Grant payment for a bachelor’s degree was $13,000, while a bachelor of arts degree was about $24,000 — with a median payment of $21,000 across all four major college majors.
The federal Pell grant is a tax credit that is intended to help low-income students and families.
It is offered to all students, regardless of income.
Students can apply for the Pell Grant through their state’s student financial aid office.
If you or someone you know needs financial help, call 800-433-9255.
The Institute for Student Debt, which represents some of the nation’s largest student loan servicers, said that consolidation offers are an effective way to make student loan repayments affordable for borrowers.
“There is no doubt consolidation helps lower the cost of servicing the loans, which is a win for students and taxpayers,” said ICSD President Jennifer R. Coughlin.
The institute says consolidation offers can also help student loan servicer companies compete with smaller, cheaper competitors.
“Consolidation is a way for lenders to offer their customers a more affordable option that provides borrowers with a low-cost, easy-to-service option,” said Coughlins executive director Jessica M. Miller.
“This is also a great way for students to reduce their monthly debt burden, which could lead to lower default rates.”
The report found consolidation rates are also higher in some states, including Florida (30%), Georgia (22%) and Tennessee (17%).
The report comes on the heels of the Consumer Financial Protection Bureau’s (CFPB) decision to allow borrowers to consolidate federal student debt into a smaller amount for lower interest payments.
The CFPB has also said that borrowers are able to refinance their student loans through the Federal Family Education Loan (FFEL) program, which offers the option of refinance loans at lower interest and principal balances.
The U.K. recently expanded its refinance program to include consolidation for some borrowers.
It will open for applications in July.