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Consolidating loans at lower rate can save thousands

WASHINGTON—Consolidating allows you to lock in your loans at a lower interest rate before the rate goes up July 1. To determine which offer is best for you, look at interest rates and loan terms.

Plug them into a loan-consolidation calculator to figure out how much you'd pay monthly and how much you'd save. Web sites with loan calculators are https://loanconsolidation.ed.gov, www.usafunds.org and www.finaid.org.

Some offers will save you thousands of dollars if you can get the same loan terms and interest rates as your preconsolidated loans. Others will cost you more in the long run, but enable you to spread out your payments.

Need more help? The Department of Education has a tip line, at 1-800-557-7392, where consolidation advisers are on call.

How much will consolidation save you?

The first number in each set below applies to $25,000 in loans consolidated before July 1; the second number is for loans that aren't consolidated.

Interest rate: 3.38 percent; 5.3 percent.

Loan term: 10 years; 10 years.

Monthly payment: $245.81; $268.84.

Total interest paid: $4,497.46; $7,261.57.

_Source: Mark Kantrowitz, finaid.org

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(c) 2005, Knight Ridder/Tribune Information Services.

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