Many parents and students who are looking to consolidate their student loans are not aware of the 1 percent LOCKED discount incentive on federal student loan consolidation offered by Phoenix-based NextStudent, the premier education funding company.

Although federal law sets the interest rate for all federal student loan consolidation , lenders are at liberty to put together incentives that entice borrowers to fund with their company. But not all incentives are created equal, and the borrower must beware.

With NextStudent's federal student loan consolidation , when student loans are consolidated under the Standard Locked Package incentive, borrowers receive a LOCKED 1 percent discount on the interest rate after 36 on-time payments. This is a discount that is guaranteed and does not change for the life of the student loan.

While many borrowers offer similar incentives, NextStudent's discounts are permanent and cannot be forfeited. For instance, all borrowers with federal student loans , whether subsidized or unsubsidized Stafford loans for undergraduates or graduates, PLUS loans (Parent Loans for Undergraduate Students), or Perkins loans, qualify for NextStudent's 1 percent rate reduction.

However, most student borrowers are unaware that a student who has used deferment or forbearance on any federal student loan is INELIGIBLE for this same discount under some competing lenders. In addition, with some competing lenders it is easy to lose the discount after a single late payment. Between 85 percent and 90 percent of those borrowers who earn the 1 percent discount with other lenders lose the discount after 36 on-time payments.