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Timing is very important when it comes to anything related to student loans. Consolidation is just as time-sensitive as anything else. Some lenders require up to 30 days to process your application.
Federal student loan rates remain the same from July 1 to June 30 of the following year. Then they can either go up or down. If you apply for a consolidation loan and that application is not processed before July 1, you will be saddled with the new rate, regardless of whether it has gone up or down.
The U.S. Congress passed the Budget Reconciliation Act of 2005, effectively eliminating the grace period that would have avoided problems like this.
So time your loan applications accordingly. If the rates are said to be decreasing it might be a good idea to wait a little bit. If you know they are going up make sure to file your application before the start of June so you do not get caught in the crossover.
This is one of many reasons why starting the process early is beneficial. Procrastination will only complicate matters.
|Jennifer Mathes, Ph.D.|