On February 8, 2006, President Bush signed into law a budget reconciliation bill that will impact your student loans as a student and a graduate. The interest rate on any new student loans (Federal Stafford Loans) that you take out after July 1, 2006 will be fixed at 6.8%. Any student loans you have taken out prior to that date will remain at a variable rate.

The good news is that origination fees on student loans are scheduled to phase out over the next several years, which means fewer fees on your student loans. Additionally, if you will be pursuing a graduate degree, a new PLUS Loan initiative will allow graduate and professional students to take advantage of PLUS funds. This will enable you to cover your total cost of attendance with federally guaranteed, low-interest loans instead of Alternative Loans, which are typically more costly.

If you are nearing graduation, you are probably thinking about consolidating your student loans through the Federal Loan Consolidation Program to lower your monthly payments up to 50%. The tips provided below will help you to deal with questions you may have concerning graduation and how to handle your student loans.

The average new graduate will owe more than $220 in student loan payments each month. Even if you have not received your first student loan payment yet, you should consider that there are important deadlines approaching. You can save hundreds or thousands of dollars in interest by consolidating now because the interest rate on your student loans will increase in July.

Because your rate is currently variable and can increase to as high as 8.25%, it is strongly recommended that you lock in now while rates are still the 4th lowest in history (you can lock in as low as 4.5%*). As the pattern of rising interest rates continues, your rate AND monthly payment will likely go up if you do not consolidate before July 1st. How you manage your student loans can have a big impact on your financial future. Following these simple tips will make it easier.

Tip #1 - Don't let your interest rate go up. Student loan interest rates are variable - they change every July 1st. You can permanently lock in your interest rate by consolidating now.

Tip #2 - Use automatic payments. Most lenders offer a reduced interest rate when your student loan payments are automatically deducted from your checking or savings account. This can add up to big savings. Plus, you won't have to remember to write a check each month, and your loan payments will always be on time.

Tip #3 - Don't get behind on your payments. If you are having trouble making your student loan payments, you should immediately contact your loan servicer to find out if you are eligible for deferment or forbearance. Just as with any other loans, late student loan payments will negatively affect your credit.

Tip #4 - Choose the best payment option for you. Multiple payment options are available to student loan borrowers who consolidate. A payment plan that fits your current financial situation can help you keep up with your loans. And, you can switch plans when you need to.

Tip #5 - Get cash back from your student loans. A lender or servicer will often offer borrowers incentives to make their loan payments on time for a specified amount of time. For example, CLC? offers borrowers up to $2,000 cash back after they make nine payments on time.* *