Should I Consolidate My Stafford Student Loans Before July 1st?

I have been getting a lot of questions about student loan consolidation lately. The big question that everyone wants answered is:

Should I consolidate my Stafford student loans before July 1st or wait?

Here are a few basics to keep in mind:

• Variable rate Stafford Loans and fixed rate Stafford Loans are different. Consolidating fixed rate loans will not necessarily lower your rate. This means you will be further ahead concentrating on any variable rate loans you have--particularly if the goal is to get a better interest rate.
• If you can drop your interest rate by a point or more, consolidating is definitely worth the time and effort.
• Consolidating loans typically doesn't cost money. Refinancing might. Know the difference and figure out which avenue is best for your individual circumstances.
• Some lenders will not offer you a consolidation loan if you have a loan balance beneath $10,000. Make sure you are working with the right lender.
• If you have low loan balances but still want to consolidate, check into the Federal Direct Loan Program.
• Rates adjust on July 1st. Your new rate will be based on May's Treasury Bill rate.
• If you want a lower rate, you should wait until after July 1 to consolidate. According to most estimates, the rate on Stafford loans could drop to 4.25 percent.
• Always consolidate your loans into fixed rate loans to lock in at a low rate.

To explore the issue further, check out these news articles (pay close attention to the Sallie Mae article, which offers conflicting advice for some situations):

• Lower Rates Make Consolidation of Federal Education Loans Look More Appealing
• Sallie Mae Halts Student Loan Consolidation
• Consolidating Student Loans at a Lower Rate Gets Tougher

If anyone has any questions or additional information about student loan consolidation, feel free to post it in the Community Forum or in the comments section below this post.