Here is a good article on student loan consolidations. I recently attended a seminar by Sally Mae (the feds student loan program), urging us to consolidate. I did. Here's why. I have stafford loans, which are a variable rate. I happened to get them for a fairly low interest rate. By consolidating, they'll take the weighted average of the loans as they are now, instead of after teh grace period (July 1st) and after the new rates kick in. It works out to about a 2.5% savings. However, there are things they don't tell you, such as since it's a variable rate, it can also decrease too.

I think this is the data on the 3-month T-bill, which loans are tied to. Seems like it's all over the place, but about 2 years ago it was the lowest rate ever. Which means if you borrowed money 2 years ago, then you got a great rate. But if you consolidated 2 years ago, it doesn't matter, because consolidation is based on the weighted average of the interest rates of your loans. Anyway i guess the bottom lin e is that if interest rates of your loans are low, then it makes sense to consolidate before your grace period ends. But for some reason bankers really really like fixed rate loans, i guess it's the predictability of them. People like them too. But every time i shopped for loans, i've always been strongly encouraged to get a fixed rate loan.

Anyway you learn something new every day.