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RISING COLLEGE costs mean that student loans are getting larger all the time, with loans greater than $10,000 becoming commonplace.

Most federally guaranteed student loans, however, require graduates to repay their loans within 10 years of finishing school.

That can cause some students a hardship because payments can be rather large. A student repaying a $25,000 Stafford loan would have to pay as much as $321 a month, for example.

In recognition of the larger debt load being carried by some students, Congress in 1987 began allowing qualified lenders to offer loan consolidation programs where graduates refinance their loans and stretch out payments as long as 25 years.

A new marketing campaign on loan consolidation for students has been started by the nation's largest holder of student loans, the federally chartered Student Loan Marketing Association, usually referred to as Sallie Mae.

Sallie Mae is sending colorful information packets to graduates that show how they can reduce their monthly loan payments by opening a "Smart Loan Account" with Sallie Mae and extending the terms of their loans up to 25 years.

It will consolidate and extend payments on four federally backed student loans:

Stafford loans, formerly called Guaranteed Loans to Students; Supplemental Loans to Students, formerly Auxiliary Loans to Assist Students; Carl D. Perkins loans, formerly called National Direct Students Loans; and Health Professions Student Loans.

The promise of lower payments may be enticing but graduates should consider carefully the implications of refinancing and alternatives offered by other lenders.

Graduates with cash-flow problems may want lower payments, but after looking at the extra interest tacked on by doubling the terms of their loans, they may have second thoughts.

For instance, consider the graduate with the $25,000 Stafford loan. Repaid over 10 years, the monthly payments for the first five years would be $303; for the next five years it would be $321.

If the graduate chooses to repay it over 20 years using Sallie Mae's level payment plan, monthly payments would be $225.

However, the student would pay a total of $12,639 in interest on the Stafford loan. Sallie Mae's 20-year loan would cost $28,983 in interest.

Sallie Mae offers two other options that reduce payments even further in the first few years, but end up costing the borrower even more in interest charges.

Despite the higher cost, those options are more popular with its customers, says Nancy Murphy, a Sallie Mae spokeswoman.

The loan consolidation program also has been popular -- 27,000 graduates took advantage of it in 1989, she says.

Borrowers have to carefully consider whether they want to pay thousands of dollars in extra interest in order to reduce their monthly payments, says James Bedard, assistant vice president for consumer marketing at M&T Bank. "The additional interest expense can really add up," he says.

Some borrowers may find consolidation worthwhile, especially doctors and other health professionals who have borrowed very large amounts of money for college but who have relatively low incomes when they first begin practicing medicine, he says.

Borrowers seeking to refinance Perkins loans also should be aware that they will lose the advantage of the low 5 percent interest rate charged on the Perkins loan. The federal regulations governing consolidation mandate that the blended interest rate on reconsolidated loans be at least 9 percent.

Borrowers also may want to consider alternate sources of consolidated loans. Many banks that participate in federal student loan programs offer their own consolidation loans.

In Buffalo, lenders such as Norstar and Citibank offer student loan consolidation. Others, like Key Bank, have dropped their programs and put borrowers in touch with Sallie Mae.

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