Anyone holding student loans - even if you're still in school - should hurry to consolidate them NOW. Recent legislation passed by all those "family values, compassionate conservative" types in Congress (you know, the same ones who just gave themselves another pay raise, while killing a higher minimum wage) will significantly increase the interest rate on federal student loans on July 1st, 2006. The added cost to you could be significant.
If you've taken out your loans since July 1, 1998, your Stafford loans will all be at 4.7% variable interest right now. Because Congress decided to (partially) finance tax cuts for the very rich on the backs of students, children, and the poor, your student loan interest rate will increase this Saturday to 6.8% fixed. Not only is that a 44% increase in interest rate, but because it is fixed rather than variable, you will no longer benefit if interest rates drop in the future!
What's this all mean to you? Well, for example, a student with only $20,000 in loans will pay more than $2,000 in additional interest over the life of their loans because of the rate increase.
But if you consolidate your loans before July 1st, the interest rate on your consolidation will be at 4.75% fixed (it's rounded up to the nearest 1/8%).
Consolidation will also benefit parents holding PLUS loans, though (as they are for unconsolidated loans) interest rates are higher than student-held loans.
It is very important to consolidate now, even if you're still in school. The feds only recently began allowing students to consolidate their loans while still in school. Before that, students had to wait until they graduated before they could consolidate. You can still get an in-school deferment to delay repayment of your loan until after graduation (or you otherwise lose your eligibility for student aid), but you will forfeit your grace period. However, most lenders offer graduated and income-sensitive repayment plans on their consolidation loans, as well as the opportunity to stretch out the payments for as long as 30 years. You end up paying more in the end if you extend your repayment term, but the monthly payment will be significantly lower when compared to the monthly payment of your current federal loans (with a 10-year repayment plan). This may be more important to many of the newly graduated, especially if un- or under-employed.
Also, until now, if all your federally guaranteed loans were held by one lender, you were required to consolidate with that lender. Very recent legislation now allows you to consolidate with ANY lender, FFEL (private) or Direct (Sallie Mae - the feds). Your base interest rate will be the same regardless of what lender you use to consolidate your loans, however there are still differences between them. You should consider customer service, borrower benefits, and repayment incentives and plans when choosing a lender.
There are no fees, credit checks, or pre-payment penalties for federal student loan consolidation. To qualify, you only need to have more than $7,500 in eligible student loan debt and be in good standing with your lenders. The application process is relatively painless, and most lenders offer an online application. Be prepared to supply your basic personal info (SS#, etc.), a couple of personal references (generally, anyone who doesn't live with you is OK) and info regarding your loans.
For this last, if like me, you can't put your hands on all this data in one coherent summary, go to The National Student Loan Data System at:  https://www.nslds.ed.gov. From their website:
"(NSLDS) is the U.S. Department of Education's (ED's) central database for student aid. NSLDS receives data from schools, guaranty agencies, the Direct Loan program, the Pell Grant program, and other Department of ED programs. NSLDS Student Access provides a centralized, integrated view of Title IV loans and Pell grants so that recipients of Title IV Aid can access and inquire about their Title IV loans and/or Pell grant data."
You have to log in with your SS #, but it tells you all the info above in one easy, comprehensive place, so I highly recommend you visit NSLDS before applying for your consolidation loan.
Time's running out. This Friday's the last day. Allegedly, anyone (who's eligible) applying before July 1st at 12:00 a.m., whether or not the loan is finalized, will be able to lock in the lower rates. But lenders are understandably swamped and I wouldn't take the risk of losing out by waiting until the last second. Take a few minutes to shop some lenders - if you haven't gotten a few (thousand) offers already in the mail, I'd be surprised (and beg you to tell me how you managed not to!) - and then apply. But apply only once, your application is also a promissory note. (I guess because there's no credit qualifications, and the loan is still federally guaranteed?) At this late date, you're probably going to be limited to applying online.
Some helpful web sites follow below. But beware, rules have changed as recently as last week. Some of the sites have not updated the information contained there to reflect these recent changes and it is confusing! Please contact your school's financial aid office and/or the lenders you are considering to learn their policies and to affirm your eligibility and application status.
https://www.nslds.ed.gov
http://studentaid.ed.gov
http://www.loanconsolidation.ed.gov
http://www.students.gov
http://www.fafsa.ed.gov
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