What’s the Issue?
Consolidating your loans - or rolling them all into one and locking in an interest rate - makes the most sense for students who have graduated and are in the six-month grace period, since they can take advantage of lower interest rates. You'd lock up a rate of 6.62 percent by consolidating during the grace period, instead of 7.25 percent if you wait too long to consolidate. When you consolidate, you stretch out the life of your loan - and you increase how much interest you'll pay over time. Increasing your loan payment from 10 years to 20 years will cut your monthly payments by 34 percent, but the interest you pay over the life of the loan will more than double.
How does this affect me?
Consolidating your student loans makes things simpler and financially manageable. You’ll make one convenient, lower monthly payment and be able to take longer to pay off your loan if you need to—up to 30 years. Students can only consolidate their education loans during the grace period or after the loans enter repayment. (Loans that are in default but with satisfactory repayment arrangements may also be consolidated.) Students can no longer consolidate while they are still in school.