How to Save Thousands on Student Loans Using a Loophole in the Federal Consolidation Program How to Save Thousands on Student Loans Using a Loophole in the Federal Consolidation Program Most graduates don't realize until it's too late that there is a loophole in the federal student loan consolidation program that allows borrowers to lock in an interest rate that is 0.60% lower than standard repayment rates. Each year's graduating class has a unique opportunity to take advantage of this loophole before it closes after the 6th month following their graduation. For students in the class of 2006, November marks the last opportunity to lock in their current low interest rate before it increases. Why consolidating during the grace period makes such an impact on savings The reason borrowers are able to save so much by consolidating college loans during the grace period has a two-part answer. First, the interest on a college loan during its six month grace period is up to 0.