If you’re just finishing college, you’ll want to consolidate your loans after you graduate but before your grace period ends, so that you can take advantage of the lower in-school interest rate (the 91-day T-bill rate plus 1.7 percent, rather than the standard repayment rate of T-bill rate plus 2.3 percent).
Timing is everything: You’ll need to complete all the paperwork and have it processed and approved before repayment begins.
The downside is that your grace period will end once your consolidation loan goes through.
If you’ve already been paying off your loans for a while, you can consolidate at any time.
If you need more cash in your pocket right now, consolidation can help by extending the life of your loan and thus trimming your monthly payments — although the length of your repayment terms will depend on the amount of debt you have, and you may not be able to extend at all.
Switching to a new lending institution might eliminate any benefits you’ve earned, like lower interest rates for on-time payments over the years.Current law dictates that you can only consolidate once, so if you consolidate at a 6 percent interest rate and rates later drop to 3 percent, you’re out of luck.