If you have college debt, you may not be aware that Stafford and PLUS loan rates are adjusted each July 1, based on the rates of short-term Treasury bills auctioned at the end of May. What does this mean for you?

• If you have a Stafford Loan from July 1998 or later, you’ll pay 4.06% interest instead of 5.99%, which can save you about $120 a year on the average $17,000 in federal loan debt for undergraduate borrowers.
• If your loan is pre-1998, your rate will be a little higher but still less than 5%.
• Still in school or in the six-month post-graduation grace period? You'll pay only 3.46% interest.
• Are you a parent with a PLUS loan? Interest rates have dropped to 4.86% from 6.79%. (Note that Perkins loans are not affected because they have a 5% fixed rate.)

Consolidating
Did you know that if you have student loans, you have an option to consolidate?
In fact, that’s how you can get these great rates to last longer than until next July.
What is consolidating? Basically, all you’re doing is refinancing at a lower rate and setting a new repayment term (usually ten years). Note that if you consolidate two or more loans, the interest rate will be the weighted average of the loans combined, rounded up to the nearest one-eighth of a percent.

Most former students who consolidate are newly out of school (one to three years) and are looking for quick cash flow relief, since consolidating translates to lower payments and therefore more cash available to pay of credit card bills.

However, consolidating isn’t for everyone. If you have just a few years left on your loans, consolidating means you could end up paying more interest, since the clock is reset on your repayment term. You could also lose any special discounts offered by some lenders, such as interest rate deductions sometimes offered as a “reward” for making your payments on time each month for a specified period. Also, you cannot consolidate if you've refinanced your loans in the past, and you can't consolidate federal loans with private loans.