With recently lowered interest rates, loan consolidation in school seem to be the words on everybody’s lips. Consolidating school loans seems like a great idea, right? Make only one payment, spend less every month, pay less interest over the life of the loan - it could definitely be just the thing that you were looking for, however, here are a few details that might interest you.

When consolidating several loans the new interest rate will be the weighted average of the rates on each of those loans, rounded up to the closest eight of a point, and capped at 8.25%. Also, private student loans cannot be included in a Federal consolidation loan.

Furthermore, keep in mind that borrowers who previously consolidated their loans, will not be able to get in on the action and neither can borrow words who are currently in school.

Be wary if you received discounts for making prompt payments as does this count can be lost with consolidation. The same applies to upfront discounts such as fee waivers, be sure to have a good look at the terms of those discounts in order to determine whether these discounts will be lost or not during the process of consolidation. On the brighter side of things, savings made by locking in current low interest rates, could easily add up to greater savings than those discounts.

Including fixed-rate federal loans along with variable rate loans is likely to make repayments simpler in one payment. But, other than that there are no financial benefits to doing this.

As re-payment goes, you could speak to a standard 10 year repayment or, at your discretion, you may opt for the new income-based repayment plan or an extended repayment. Longer repayment times will add up to more interest paid over the life of the loan, but may be convenient for lower monthly payments.

Paying off that seemingly absurd amount of debt known as school loans may seem like an impossible task to both parents and young college students alike, with Federal loan consolidation at historically low interest rates, allowing lower monthly payments, things start to look a little less daunting.