Freeze Your Student Loan Rates

By Jose Vazquez, YOUNG MONEY Financial Aid Columnist

Every student in the U.S. has been hit with the news that student loan interest rates are the lowest they have ever been. Graduates have especially received more mailers, emails, and phone calls from consolidation companies than they care to remember.

Often, people are told that they must wait until they graduate to consolidate. However, students that choose to drop out of classes for various reasons often don't know that they too can consolidate. No matter what reason a student has for leaving school early, consolidation can help them down the line. Here are some of the advantages to consolidation.

Over time, the loans you have taken out have been assigned different variable interest rates. Variable is the key word here. While the loan you received may have offered 3.5% at first, the rate will climb as interest rates climb. If you have two or more of these loans, then you may have owed amounts at different rates that can rise or fall annually. Considering that interest rates have nowhere else to go but up, it's a safe bet that your debt will climb faster than it would if you consolidate.

By consolidating and staying on your 10-year payment plan, you can lock your interest at today's rates and save some money over the long haul. Also, all of those loans that may have come from multiple banks can be a pain to deal with. Consolidating your loans means you deal with one company and one payment rather than several. In addition, you can receive added bonuses, such as interest rate and payment reductions if you pay on time over a period of months and/or have your monthly payment automatically withdrawn from a checking or savings account.

If you left school for financial, family, or career reasons, odds are you will want to return to college down the line. However if you fail to pay on your student loans while you are out of school, you can be kept from receiving any financial aid when you return. And if financial reasons were part of the reason you left school, digging a deeper hole will only make it harder to return. Your loan(s) will also become easier to manage and pay off. Once your loans are consolidated, you retain the right to apply for deferment or forebearance. In addition, you can take advantage of graduated and income sensitive repayment options.

While it may sound extreme, the truth is that you can't hide from student loans. School loans are completely immune to bankruptcy, and students that don't pay their bills face stiff penalties, such as poor credit ratings, IRS penalties, and garnishment of wages.

In addition, you will be unable to attain licenses in certain fields, and be excluded from some government contracts if you own a small business. Avoiding a student loan is no way to begin a life after college. If you do return and take out more loans, you will be able to consolidate again after graduation.

In the end, about half of the students coming out of college have actually graduated. It can be tough to stay in school financially, and hard to come back. However, by consolidating your loans and paying on them monthly, you will create one less barrier to coming back to school and keep your credit rating clean.

Regardless of your current situation, consolidating your college loans is a practical decision. Market trends indicate that student loan interest rates could double this year. This threat creates an urgency to consolidate your loans in order to reserve the current, low interest rate. For more information on student loan consolidation, contact American Collegiate Financial Services (ACFS) at (866) 291-0852 or visit ACFS on the web at OneStudentLoan.com .

Jose Vazquez is a graduate student in higher education and college student personnel at Southern Illinois University, and has been awarded more than 30 scholarships, amassing more than $150,000 in aid to date. He is the author of the book "Free Cash For College: The Everyday Students Guide To Financial Aid," available at vazquezmedia.com. Vazquez is also a public speaker that gives seminars on financial aid and scholarship strategies for colleges and university groups, as well as student loan providers. He can be reached at Scholarshipguru@youngmoney.com .