If your goal is to lower monthly payments on your student loans, consolidation is not the only option. There are a variety of ways to lower your payments. Call the T.H.E. Debt Management Counselors at 1-866-562-6672 to talk about your loan situation.

When should you consider consolidation?

A few years ago, consolidation was a great way to lock in low interest rates on variable-rate Stafford and PLUS loans. Loans made since 6/30/06 are fixed-rate loans so your rate will stay the same for the life of your loan. The weighted average formula for consolidation loans can often cause these rates to increase slightly.

It might make sense, however, to explore the benefits of consolidating these types of loans:
• Variable-rate Stafford loans (disbursed between 7/1/98 and 6/30/06)
• Variable-rate PLUS loans (disbursed between 7/1/98 and 6/30/06)
• If you only have fixed rate PLUS loans at 8.5% consolidation can reduce these loans to the maximum consolidation rate of 8.25%. If you mix in other loans, you lose this advantage

Other considerations:
• If you have variable-rate subsidized Stafford loans, you should consolidate as close to the end of your deferment or grace period in order to avoid losing subsidies on the subsidized balances.
• The current variable rate will remain in effect from July 1, 2008 through June 30, 2009. If your loan status will not change during this period, you might want to wait and see if the variable rate will go up or down on July 1, 2009 before making your consolidation decision.

Who offers federal loan consolidation?

Because of recent legislative changes and current market conditions, many lenders, including T.H.E., are no longer able to offer federal consolidation loans. With so few lenders providing consolidation, you’ll have to do your research if you’re interested in this loan option. You can also work with the government’s Federal Direct Consolidation Loan program.