June: Consolidate Student Loan

Rates for college loan are reset every year based on what the 3-month Treasury yield is at the end of May. So, your payments will be going up on July 1 due to recent increase in interest rates. Since this time last year, that yield has increased nearly 2 percentage points.

So, the repayment rate on Stafford loan (the federal loans for students) is expected to jump to about 7.3% from its current level of 5.3%. You are entitled to get a lower rate if you had start repaying your loans while you're still in school or up to 6 months after graduation. That 'lower' rate is expected to rise to about 6.7% from its current 4.7%. The rate on PLUS loans (student loans taken by parents) is likely to rise to roughly 8.1% from 6.1%.

So, June is the month to consolidate your loan to lock in a lower rate. Remember that by law you're only permitted to consolidate your student loans once. So if you've done so before, you can't repeat that again.

At the time of consolidating you roll all your loans into one and lock in a single rate on the money you owe. If you consolidate your loans in June, you can get a rate of 5.375% for regular student loan repayment, and 4.75% if you're still in school or in the grace period (That applies to Stafford loans obtained after June 1998). For PLUS loans, the consolidation rate is 6.125%.