Student Loans Consolidation:

Consolidate Credit Card

You know you don’t have to begin paying back your student loans until 6 months or so after graduation. You may want to start early, that can only be a good thing! Interest *****!!!!!!

Consolidate Credit Card Debt:

Free Debt Consolidation

Great questions!

There are pros and cons to consolidating, especially when you are still in school.

The biggest advantage is that you would obtain an interest rate that’s almost 2% lower than the one you’d recieve next year (after 7/1/06). The biggest downside to consolidating is that you will lose your 6-month grace period (9 months for Perkins), so your first payment will probably be due within a month after you graduate. You will, however, retain the ability to apply for deferments and forbearances. Even better, the subsidized portion of your Stafford loans will retain their interest subsidy (meaning that, even if you consolidate your Subsidized Stafford loans with other unsubsidized loans, the government will continue to pay interest on those Sub loans any time that you are in school or in-grace — a great “perk” if you plan on going to Grad. school).

If you decide to go to graduate school, your consolidation loan will be eligible for an in-school deferment (just as your Stafford and/or Perkins loans would be if you didn’t consolidate).

Keep in mind that the loan for your last semester (Fall 2006, I assume?) might not be able to be added into this pre-July consolidation unless it’s been fully disbursed by the time you apply to consolidate. But if you consolidate now and later borrow new loans (in grad school, or in the 1 semester you have left), you DO have the option to obtain a new consolidation loan that can include (a) your old consolidation loan and (b) your new Stafford and/or Perkins loans. (Basically, this is the only case in which a student is ever allowed to “reconsolidate.”) If you choose to do this, just remember that your future Stafford Loans will be offered at a rate of 6.8% — so adding them into your consolidation (which you’ll get at about 4.75%) will probably increase the overall interest rate on your Consolidation Loan.

It gets a little complicated, I know. All things considered, if you think you can handle losing your grace period, consolidating is probably your best move. 2% in interest can really add up over 12-30 years.