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Info.GradSchools.com »» Financial Aid »» How to Know When to Consolidate Your Student Loans

How to Know When to Consolidate Your Student Loans

The answer to that question is primarily based on where you are in your life-whether you're still in school or have become an alumnus. If you're in "repayment" mode, meaning you're all done with full-time school and the student loan bills are starting to come, then you can consolidate now. If you're in a "grace period" (the time right after you graduate but before you have to pay your student loan bills), you can consolidate. If you're still enrolled in the program for which you borrowed, you can't consolidate.

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No matter your loan status, however, there is one date on the calendar that you should be aware of: July 1. On that day each year, interest rates for all but the newest federal student loans are reset. Keep an eye out for information about what the new rate will be. Indications are that it will increase slightly in 2007, so consolidating prior to July 1 will ensure that you consolidate at the rate in place before the change.

So long as your application for federal consolidation is complete and submitted before the deadline, you're good to go. Note however, that in general, it takes between 30 days to 90 days to complete the loan consolidation process. Once your loan is consolidated, you're first payment will be due in 60 days.

Can I "Re-Consolidate" My Current Consolidation Loans?

It depends on a couple of factors. The general rule is that you cannot re-consolidate most consolidation loans on their own. The one exception is for loans that were consolidated under the federal Direct Loan Consolidation program, which can be re-consolidated. For all other federal loans, you must have a new loan to add to an existing consolidation loan to re-consolidate. Of course, there are many exceptions and restrictions, so check with your lender for more information.

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