If You Have Student Loans, Read This

Fine Print for Parents

Walker came up with an interesting twist for parents with PLUS loans: many don't realize that those can be consolidated. That might be an attractive option for the older, variable-rate PLUS loans, especially if you think inflation might drive interest rates higher in future years.

The consolidation formula is similar to that for Stafford Loans. The new 5.01% variable rate is rounded up to 5.125% -- not a bad rate to lock in. But you have until next year at this time to make that decision, so there's no rush.

Why would you consolidate the fixed-rate 8.5% PLUS loans that parents of grads have taken out in the past two years? Walker points out that PLUS loans have a maximum consolidation rate of 8.25%. So you might want to consolidate them separately through the Department of Education, to shave one-quarter of one percent off your repayment rate.

It's a very complicated, even tricky, business to deal with student loans. And that's The Savage Truth!