Grads' Study Assignment: Loan Consolidation

· Don't consolidate until you've done some research. Despite what you may hear from lenders, there's a lot to consider about this choice, such as the fact that extending your loan increases the total amount you owe. Start with the Education Department's Web site at http://www.loanconsolidation.ed.gov. Click on the link for "Borrower Services." Another excellent resource is http://www.finaid.org. You'll find lots of tips on what to watch for in choosing a consolidation lender.

· Now go to the Web site for the Project on Student Debt at http://www.projectonstudentdebt.org and click on the link for "resources." This nonprofit has compiled a very helpful guide explaining the discount offers for consolidation loans. Lenders vie for your business by offering various discounts.

For example, most lenders will reduce your interest rate if you make a certain number of on-time payments. While that reduction for on-time payments is enticing, there's a catch. You have to be on time all the time for the life of the loan. Miss even a single payment and the discount could disappear.

· Next, compile a list of lenders to comparison-shop various offers. Considering all the controversy about conflicts of interest in the student loan industry, don't just rely on the preferred lender list from your school. There's one important change you may not know about. You can now consolidate with any lender, even if all of your loans are with a single lender. One source for comparison shopping is SimpleTuition ( http://www.simpletuition.com). This company has created a database much like those for finding competing airline rates. The database is limited and lenders pay a fee to be listed.

· Once you have narrowed down your lender choices, use the http://www.finaid.org loan discount analyzer, which breaks down the discount rates in real dollars. When you see the calculator it looks a bit daunting. But don't be intimidated. Take the time to fill out the calculator carefully so you get a clear idea of what each lender's discount is worth long term.

I know you may have a lot on your plate, what with possibly moving and getting settled into a new job. The last thing you may want to do right now is think about your student loans. But you're in the real world now, so do the real work it takes to find the best consolidation loan deal. After all, that debt is going to be with you for a while.

· On the air: Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online athttp://www.npr.org.

· By mail: Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071.

· By e-mail:singletarym@washpost.com.

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