There are two main reasons to consolidate student loans. One is to consolidate your payments, so you only have to write one check per month and reduce the chance of incurring late fees.

The other is to lock in a fixed interest rate. Before the 2006-07 school year, the interest rate on federally guaranteed Stafford and PLUS loans changed once a year. Many students consolidated these variable-rate loans into a fixed-rate consolidation loan, thereby eliminating their interest rate risk. The interest rate on a federal consolidation loan is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest 1/8 of a percent and capped at 8.25 percent.

Today, all new Stafford and Plus loans have fixed rates, so there is less reason to consolidate new loans. However some parent PLUS loans have fixed rates as high as 8.5 percent. If you have one, you could benefit by converting it into a consolidation loan at the maximum rate of 8.25 percent.

For more, see http://www.finaid.org/loans/consolidation.phtml