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When you consolidate student loans it is a great opportunity to lower your monthly payments and free up some cash each month. Here are some smart tips when consolidate college loans:

•If you are in your grace period, it is the best time to consolidate student loans. You are in the grace period if you have finished school but you are not yet in the repayment period, which usually begins 6 months after your graduation. If you consolidate student loans during your grace period you can usually qualify for a lower interest rate from the lender.

•The federal government passed a recent law that lets borrowers consolidate college loans with any eligible FFELP (Federal Family Education Loan Program) lender. This means that you have more lenders to choose from than you did in the past.

•The federal government has set the interest rate on consolidation of federal school loans, and this is part of federal law, so lenders are legally bound and cannot charge you a higher interest rate for any reason. It's always best for you to get the lowest interest rate.

•If you have both federal and private student loans, don't let your lender put them together into one consolidated loan. If you do, you will lose the federal benefits that are part of your federal loans. For instance, the cap on interest charged is at 8.25% now for federal student loans, and you would lose this cap if you consolidated both federal and private loans into the same loan. Deferment and forbearance are options that you can use with federal student loans if you fall upon bad economic times like losing your job to layoff or termination, becoming disabled and unable to work, etc. These are important benefits that you would be wise not to lose when you consolidate college loans.

•The Higher Education Act was passed for the protection of students taking out loans for educational expenses. It specifically mandates that federal student loan consolidations have to have fixed interest rates, no processing fees or loan fees of any kind, no credit checks for the borrower, no prepayment penalties if the borrower pays off the loan early, and a lower interest rate if the loan is consolidated during the grace period.

Provided by Bruce D Hunter