Loan Consolidation

The deadline is approaching for college graduates to consolidate their student loans in order to take advantage of some special deals.
If students do not consolidate now, they'll be missing out on discounts that will end when the month of October begins. However, it is possible that graduates could secure even lower interest rates if they wait until July to consolidate.
Counselors are urging graduates to check out loan programs fully before signing on the dotted line. It's important that grads know exactly what benefits they'll miss out on if they don't consolidate before the end of September.Congress has approved legislation that will eliminate close to $21 billion in federal subsidies to student loan companies on new loans in October. As a result, lenders plan to cut out discounts for graduates when September ends.
For example, Sallie Mae has stated that it will no longer offer this incentive: a 1-point cut in the interest rate for borrowers who pay their student loan bills on time for a period of 3 years. The lender has sent notices to 43,000 borrowers, more than half of whom have decided on consolidation by the end of September.
Recently, the Federal Reserve reduced a benchmark interest rate which affects the rate for variable-rate student loans. Additional rate cuts may be on the way, which would mean that borrowers can obtain an even lower rate if they wait until the summer months to consolidate their student loans. In fact, some experts say that graduates may be much better off if they wait before consolidating.
Borrowers should also keep in mind that if you extend your loan through consolidation, you may end up paying more in interest over time. Therefore, while you may experience a short-term gain, you may ultimately face a long-term loss.