Q Do you have any tips on finding low-interest student loan consolidation? My wife graduated from grad school last August and student loan payments are headed this way, so we want to plan ahead.


A Consolidation really is nothing more than refinancing. You take your old loans and repackage them into one loan. One bill. One check. Simple record-keeping.

Here's how Gradloans.com bills the benefits of consolidating graduate federal students loans: "Reduce your monthly payment up to 53 percent ... stretch your repayment period from the standard 10 years to up to 30 years ... the lower monthly payment means you'll have more money available to meet other household expenses."

True enough. But the price you pay for consolidating can be steep. In essence, most graduates lower their monthly payments by lengthening the life of the loan. That means you can end up paying thousands more in interest on the loans. Let's say you owe a total of $49,000 in student loans at 6.8 percent. That's nearly $564 a month with the 10-year repayment, for a total graduate school bill of $67,667.

Consolidate with a 30-year timetable, and the monthly bill drops to about $319. But the overall cost of that advanced degree jumps to some $115,002.

Consolidation is less attractive for some these days for another reason. Depending on the interest rates charged on the loans, you may or may not get a lower rate when you consolidate. The fixed rate on consolidation equals the weighted average of the rates on your existing loans rounded up a fraction. That's why consolidation is a slightly more expensive option for borrowers with fixed-rate student loans.

However, you can always accelerate your payments on the consolidated student loan with no prepayment penalty if your income unexpectedly takes a turn for the better.

If you do consolidate, don't mingle federal graduate student loans with private graduate student loans. If you do, the consolidation will become a private loan and you lose many of the benefits and much of the flexibility attached to federal student loans, such as the right to defer payments if you go back to school or to forbear payments for economic hardship.

You might check these sites: www.simpletuition.com and www.finaid.com. The first allows you to compare consolidation options. The second has a list of lender discounts.

Chris Farrell is economics editor for American Public Media's weekly "Marketplace Money" show on public radio. He lives in St. Paul. Send questions to cfarrell@mpr.org or kaching@startribune.com and put "Your Money" in the subject line.