"Quite frankly, they've been bombarded with marketing materials telling them they need to consolidate, when for the majority of them, the only thing it will do is send their payments out for 30 years. A lot of the information they get makes them think they have to do it, or that it's the thing to do," he says.

Kay Lewis, director of financial aid at the University of Washington, says the UW consolidation site attempts to give "good neutral consumer information," including the warning not to consolidate certain loans.

"Some of the fixed-rate loans, such as the Perkins loans or health-care loans, you might not want to consolidate with your other loans, especially those that have some unique deferment options," she says. "You might lose some of those deferment options if you consolidated them into a federal consolidation loan."

College rush week
College Loan Corp. of San Diego has been understandably swamped with last-minute consolidation loan applications. The nation's seventh-largest lender in the federal student loan market is a preferred provider to more than 1,100 U.S. colleges and universities.

"Last June (2005) was definitely the busiest month in the history of College Loan Corp. This June is shaping up to be a very active month as well," says Mark Brenner, vice chairman.

Brenner admits that the usually sleepy college-loan market has seen an increase in competition the past few years and especially so with the approach of the consolidation deadline. Even staid old Sallie Mae has pumped up the volume lately.

"There is no question that a number of companies have become more vested and creative in their approach to the student-loan business, and as a result of that, some of the established players have reacted with strong marketing efforts of their own," Brenner says. "That has led to a lot more marketing material and a lot more information for borrowers."

Despite criticism from some that the new college rush, by lenders, has stepped over the line by encouraging students to extend their loan terms in exchange for lower monthly payments, Brenner says borrowers still come out ahead, and the lower payments can help free up money to pay off higher-interest credit card debt.

The daylight at the end of the industry's marketing blizzard, he says, is that borrowers who consolidate can't help but save money, even if they take their loan to term.

"You're looking at a program with no application fees, no credit checks and no prepayment penalties. There's no reason that a borrower, when they get into a better financial situation, can't pay off that debt," he says. "At the same time, it's probably the least expensive loan they're ever going to get."

Ready to consolidate? See "7 simple steps to consolidate your student loans," or to get more information, return to the table of contents page.

Jay MacDonald is a contributing editor based in Mississippi.