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| The standard
debt
consolidating repayment plan for student loans calls for equal
monthly payments and a ten-year payback period. If that's more than
you can afford, call your lender before the grace period ends to ask
about other repayment options. For example, Carter is a prime
candidate for loan consolidation because she owes money to three
different lenders at different rates. With the consolidated loan,
the interest rate will be a weighted average of all the loans,
rounded up by one-fourth of a percentage point. Variable rates for
government-sponsored Stafford loans are unusually low now, so
consolidating locks in an attractive rate. Once you're locked in,
however, you're stuck if the Stafford rate happens to drop in the
future. When consolidating loans, start with your current lender,
advises Robin Leonard, author of Take Control of Your Student Loan
Debt (Nolo.com, $19.95; 800-992-6656), and shop elsewhere if you
don't like the terms. The U.S. Department of Education, for example,
is offering an interest-rate reduction of 0.6 percentage point for
borrowers who consolidate before starting repayment. Most lenders
will also reduce the interest rate if you pay electronically, with a
further reduction of two percentage points once you make 48
percent. |