Student-loan borrowers, take heed: As of July 1, the interest rate on outstanding Stafford loans will rise almost two percentage points, to 6.5% if you're still in school or in the grace period and to 7.1% if you've already started repaying.

You can avoid that hike by consolidating your loans and locking in the current rate, but act now. This window slams shut at midnight on June 30. Parent borrowers who have yet to consolidate should also get cracking. The rate for PLUS loans rises on July 1, from 6.1% to 7.9%.
When you consolidate, you're basically refinancing your loans. It's usually a one-time deal. If you consolidate your loans, you can't do it again if rates happen to fall -- unless you add a new loan to the mix. In that case, you'll lock in a weighted average of the current rates on all your loans if you consolidate more than one.

Most people understand the money saving impact of student loan interest rates when consolidating student loans after graduation. However, most borrowers don't realize that there are even more ways to reduce the interest paid on student loans through lender incentives.
In addition to shopping around for the lowest student loan interest rate, do some comparison shopping for incentive programs. Make comparisons of the following types of incentive options and see how ScholarPoint can save you thousands of dollars above and beyond the regular student loan consolidation savings.

On Time Payments and Interest Rate Reduction incentives reward borrowers with a lower student loan interest rate simply for making payments as scheduled. Many lenders offer student loan interest rate reductions of up to 1 percentage point after 36 months of consistent on-time payments. However, in a bold move to reward its best customers, ScholarPoint offers a 1 point interest rate reduction a full year earlier than the average lender.

Auto pay interest rate reduction incentives give borrowers a discount simply for electing to have payments deducted from their account automatically. Many companies offer student loan interest rate reductions of .25%. Again ScholarPoint has pushed the envelope, offering a .50% student loan interest rate reduction as an auto pay incentive.

Reducing your student loan interest rate by 1.5 percentage points with ScholarPoint's incentive reductions can make a huge impact on your overall repayment amount. On a $30,000 loan a 1.5% student loan interest rate savings can amount to a savings of roughly $2,700.

Competition in the student loan consolidation industry has greatly increased over the past several years. This equates to big savings for borrowers as lenders offer even more enticing student loans and student loan consolidation programs. ScholarPoint has spent years analyzing the student loan refinancing industry and developing one of the most comprehensive incentive programs in the industry.

The current interest rate cap for student loan refinancing is 8.25%, but that doesn't mean that you can't enjoy a lower rate. Federal student loan consolidation interest rates are set by the federal government, so comparing lenders based solely on rates won't uncover the best deals. To understand how these savings work, it's important to understand how the student loan consolidation rate is determined:

What determines your student loan consolidation rate?
Your interest rate will be a weighted average of your current federal loan interest rates, rounded up to the nearest 1/8 of a percent. For example, consolidating a $14,000 loan at 7.14% with a $7000 loan at 5.0% would have a consolidation rate of 6.5%. See how this is calculated.

Be wary of any lender who says they can save you money by offering you a lower base interest rate than your current loan—they can’t. The rates for student loan consolidation are dictated by the Federal Student Loan Consolidation Program. However, there are two ways that you can lower your consolidation interest rates.

1. Consolidate before your grace period ends
Your consolidation rate is determined by the current interest rate of your Federal Student Loans. What many graduates don’t realize is that the interest rate on their loan during the grace period is 0.60% lower than when the loan moves into repayment status. This means that you can enjoy the benefits of lower interest rate payments for up to 30 years just by refinancing during within the first 6 months after graduation.

2. Shop around for borrower benefits
Where lenders do differ, is in the money saving incentives they offer borrowers. One student loan refinancing company may offer a discount for on-time payments. Another might offer a percent reduction for automatic withdrawal of payments. ScholarPoint offers all borrowers generous money saving incentives for both on-time payments and auto pay.