NEW YORK (MONEY Magazine) -
You have one opportunity to roll all your federal student loans into one and to lock in a rate that's at or near a historic low. (The rates change each year on July 1.)
If you got all of your loans through a single lender, you must consolidate with that lender, but if you used more than one source, you can shop around. (To see what's available, type "student-loan consolidation" into any browser.)
You're not shopping based on interest rate. The rate you'll receive will be the same at all lenders.
What you're looking for are rate discounts. There's a future-rate discount for good behavior (borrowers who have at least $10,000 in debt generally qualify for a discount of 1 percent if the first 48 monthly payments are on time). And there's a discount for having monthly payments directly debited from your bank account (usually 0.25 percent).
If you consolidate while you're still in the 6-month grace period after completing school, you get an extra 0.6 point break on the interest rate, but you have to start repayment on the consolidated loan immediately.
Note that consolidating is not the best move for all borrowers. If you have an older loan and you've qualified for discounts by making 24 or 48 on-time payments, consolidating may mean swapping back to a higher rate than you already have. Also, if you have Perkins loans, you should check to see whether, by consolidating, you'll lose the chance to put your loan on hold (or to have the government pay the interest) if you take certain public-sector jobs or go back to school.
Lenders say that borrowers who consolidate their student loans lower their monthly payments by $150 on average. To get an exact number, run your loans through the calculator at the Federal Direct Loan Consolidation Information Center.
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