Because once they do it, it can't be undone. Someone with different types of federal loans or someone who is planning on going back to school may decide a consolidation loan is not for them. Each borrower has a different set of circumstances. They need to make sure they understand what they're doing. Information, applications and calculators for consolidation loans are available on the USA Group and Sallie Mae .
Borrowers can also contact their lenders with specific questions on consolidation loans.
New graduates may want to weigh the pros and cons of consolidation loans fairly quickly, in say, the next six months. After they leave school there's a six-month grace period before their loan payments begin. By consolidating during that grace period, they'll lock-in a 5.39 percent rate, rather than the 5.99 percent rate that kicks in at the start of the repayment period. Lots of borrowers end up signing on for a consolidation loan because they need more breathing room in their monthly budgets. If your student loan payments add up to more than 8 percent of your gross monthly salary, you're a good candidate for a consolidation loan.