Future Grads: Consolidate Loans Before Summer

by Center for Personal Finance editors

If you're graduating soon and haven't consolidated your student loans, do it before July 1, 2006 according to CNNMoney. Rates are going up. Put your loans into early repayment status and get an in-school deferment. It's likely that Congress will approve higher rates for Stafford and the Parent Loan for Undergraduate Students (PLUS), moving them from variable to fixed rates. Stafford loans, now about 4.7%, will jump to a fixed 6.8%, and PLUS loans, now about 6%, will be fixed at 8.5%. The rates won't jump for individuals currently paying on their loans, but it's anticipated that interest rates on variable loans will increase up to two percentage points by July.

However, if you consolidate all of your loans prior to July 1, you will not be eligible to reconsolidate with another program unless you leave at least one loan unconsolidated.

February 28, 2006