Another Reason to Consolidate

Potential changes in the federal government’s student loan consolidation rules may make it an advantage to consolidate student loans.

From CNN Money:

You also might consider consolidating soon because lawmakers may change the rules governing federal student loans. Two of those potential changes would make loan consolidation less advantageous for borrowers.

President Bush has proposed eliminating the fixed interest rate in consolidation, and replacing it with a variable rate.

That would mean your rates would change every year, although they couldn’t exceed 6.8 percent.

A variable rate loan policy will have even more effect on first or second year college students with fewer student loans, and students who have not yet entered college yet. Furture college students faced with a variable rate loan would be at the mercy of the current rate. They would not be able to lock in low rates with consolidation, as students are able to now.

While this is just a proposal, and nothing has passed yet, it would still be wise for parents and students to look at consolidating student loans.