Can I consolidate PLUS loans at a lower interest rate?

Q: I have two Parent PLUS loans: one is for approximately $9,800 remaining on a trade school my first son went to, and two is for approximately $40,000 for the first two years of college for my second son.

My questions are: I was hoping to combine the two loans and reduce my monthly payments at a lower interest rate, but from what I have been reading lately, would I be able to do that? If not, would I be better off having my second son apply for a student loan -- hopefully at a lower interest rate, and co-sign, that way delaying the payments until after he graduates? (But in the meantime make the interest payments and pay some amount each month towards the principal also.)

A: You definitely want to consolidate those PLUS loans -- AFTER July 1st when rates drop. Current PLUS loans are made at fixed rates, so consolidation won't do much for you. Here's a link to some information.

Definitely try to get student loans, versus PLUS loans for your second son. You might want to consider having him move home and attend a local college for one year. Many schools will make this accomodation, and accept the grade transer back for senior year, so he can get a degree from his current school. You have to explain there is a family financial crisis -- schools are understanding this. Either they'll offer more free aid, or accept a year away, living at home.

This is a far better solution than going deeper into debt for your children's education.

Terry Savage is a registered investment advisor and the author of the newly published The Savage Number: How Much Money Do You Need To Retire? (256 pages, Wiley, $24.95).