Student Loan Consolidation Advice: In-School Student Loan Consolidation

Student loan interest rates are determined by the 91-day Treasury auction. Each year, new interest rates take effect on July 1st, and they're effective until June 30th of the following year.

On July 1st, 2006, interest rates on student loans will rise to a fixed interest rate of 6.8%. Interest rates on PLUS loans will rise to 8.5%. This has left many students looking for student loan consolidation advice. This article examines the benefits and disadvantages of student loan consolidation.

Because of the increased interest rates, many college students are considering student loan consolidation to lock themselves in at the current low interest rate. Current rates for student loan consolidation are as low as 4.75% for students with deferred student loans and 6.125% on PLUS loans.

These increased interest rates are a result of America's booming economy, and rates have been rising steadily over the last few years. For this reason, it may be of benefit to students who are nearing graduation to consider student loan consolidation. Interest rates will not likely drop back down to current rates within the next two years. The difference between a 4.75% interest loan and a 6.8% interest loan could save you thousands of dollars when the time comes to repay your loans. This had caused many students to seek student loan consolidation advice.

Students may seek student loan consolidation in order to save themselves money in the long run. However, they should keep in mind that their six-month deferment period will not apply to consolidated student loans. Students are allowed a six-month grace period after graduation in which the government continues to pay the interest on their student loans. However, student loan consolidation forfeits this grace period.

Student borrowers should consider two things before deciding to seek student loan consolidation. The first is whether or not they will be able to afford their loan payments immediately upon graduation. The second is the difference between the cost of repayment on loans consolidated before July 1st, 2006, and the costs of repayment with the new fixed interest rate of 6.8%.