Consolidation of Student Loans

Many students have consolidated their student loans, both federal and private. The students can lock in a somewhat reasonable fixed federal rate (though it is higher than five years ago through congressional subsidy cuts).

Private loans are consolidated with variable interest rates. For now, the consolidated variable interest rates are low due to the weak economy and the Federal Reserve's attempt to "juice" the economy.

However, if investors in the US dollar ever take flight - if our dollar takes an inflationary path - these private loans will strangle the borrowers even more than now.

The macro economists are concerned with deflation right now, and this deflationary concern is keeping the variable interest rate low. Heaven help us if inflation returns.