For two weeks, Tom Gallagher didn't have much success reaching his son and daughter, who are working at a camp deep in the Adirondacks.
Cell phone reception is weak. Internet access is limited. Still, the Mitchellville, Md., father sent several e-mails reminding them to consolidate federal student loans before higher interest rates kick in Friday.
"I've been pushing both of them to try to do that," said Gallagher, who did the same with $71,000 in parent loans last month. To his relief, his daughter e-mailed this week to say they're taking his advice.
They'll join tens of thousands of borrowers rushing to roll old loans into a new one and lock in the lowest interest rates in the federal program's 40-year history. Federal student and parent loans carry a variable rate that's adjusted each July.
The loans are set to jump nearly 2 percentage points - the first increase in five years and the largest in more than two decades.
It became clear months ago that rates were headed up. Schools and lenders alerted borrowers; the Department of Education sent out 1.3 million e-mails urging students and graduates to consolidate and switch to a fixed rate before it's too late.
Borrowers got the message.
"It's crazy," said Clark McGhee, executive vice president of Collegiate Funding Services in Fredericksburg, Va. "I've been in the student loan business for 16 years. These last two months are the busiest I've ever seen."
Calls to SunTrust Education Loan are up four times than usual.
"The number of applications that we are generating has tripled," said Kathy Claar, the consolidation business unit manager in Richmond, Va.
Some borrowers report the process is a breeze, taking 10 to 20 minutes either on the phone or online. College Loan Corp., a San Diego-based loan provider, boasts that 97 percent of calls are answered by a person within 30 seconds.
Amanda Graham in Columbus, Ohio, combined five loans totaling $15,000 online about three weeks ago.
"It took about 10 minutes. It was easy to do," said the 24-year-old who graduated two years ago.
"It's like a sigh of relief to know that it was done. I should have done it a month ago," said Elisha DeNeal, a parent in Fredericksburg, Va., who figures she spent three hours on the phone - minus a half hour dinner break - with her lender last week.
Through a three-way phone conversation with her Fredericksburg lender and her son in Washington, DeNeal applied to consolidate her $14,000 in parent loans as well as his $33,600 in student loans.
With such high demand, long waits can be a problem. Hernandez said his organization was taking applications from borrowers who couldn't get through to some larger lenders.
To speed up the process, lenders often steer customers to Web sites where they can fill out an application online. But that doesn't solve all problems.
But patience in this case pays off.
Today offers the last chance for people to consolidate student loans and take advantage of low rates.
Beginning Friday, rates:
¢ on Stafford loans automatically will jump from 2.77 percent to 4.7 percent for students in school or those in deferment and grace periods.
¢ for borrowers already repaying on student loans will rise from 3.37 percent to 5.3 percent.
¢ for parents with a Parent Loan for Undergraduate Students, or PLUS loan, the rate will jump from 4.17 percent to 6.10 percent.
By consolidating, borrowers get a fixed rate based on a formula. For instance, students in college or recent graduates in a grace period can lock in a rate of 2.875 percent on Stafford loans. Those already in repayment can fix their rate at 3.375 percent.
New graduates with $20,000 in Stafford loans can save nearly $4,700 in interest over 20 years by consolidating now, according to Sallie Mae, a loan provider. Those in repayment would save about $5,100.
Gallagher, who e-mailed his children in the Adirondacks, switched from a 20- to 30-year term when consolidating his parent loans. That cut his $800 monthly payments in half, although he can accelerate payments.
"I got a $400 buffer I didn't have," he said.
Other factors are motivating borrowers to act now, too.
In mid-May, the Education Department said students could consolidate loans through private lenders while still in school, an option only available previously to those in the government's direct lending program.
And Congress is weighing proposals to revise the rules on consolidation next year to lower the cost to the government, which subsidizes low-rate loans. One proposal would give borrowers the option of consolidating with a variable or fixed rate, although the latter would be at a somewhat higher rate.