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Former college students seeking to cut their student loan payments can take advantage of several special deals from both the federal government and other lenders, who are shaving interest rates for a limited time.

The deals involve replacing the old loans with a new one at lower rates -- a procedure usually referred to as debt consolidation.

The reauthorized higher education bill that passed Congress last month extended the special rates by three months until Jan. 31.

Several other players in the loan market also are offering consolidation rates that meet, or in some cases beat, the federal government's discount.

But loan experts caution borrowers to check with their current lenders before consolidating. Extending consolidation payments over a longer period than the original loan could increase total interest payments, and those who consolidate also forfeit borrower discounts built into existing loans.

The federal program works like this: Any former student who is paying back federally guaranteed student loans can apply to consolidate their loans and save about $50 per $1,000 borrowed during the life of the new loan, according to the Department of Education. For example, a borrower who consolidates $19,000 of loans would save about $950 during the standard 10-year student loan. Parents who hold federal PLUS loans also can apply. These loans are taken by the parents instead of the students.

For information on the federal consolidation program, call (800)557-7392 , or check the Department of Education's Web site at:

Bonds carry their own risks

Compared to this year's paroxysms in the stock market, the bond market probably looks like a sea of tranquility to most investors.

Bonds have been posting some of their best returns in years, making them an enticing alternative to stocks.

But before jumping headlong into bonds, investors should first realize that all bonds aren't created equal, said Jan Holman, vice president of investment services for American Express Financial Advisors.

Beneath the apparent calm of the bond market lies a wicked undercurrent of volatility that can punish the unwary bond investor, Holman noted. While some bonds offer a safe haven from a declining stock market, others will decline in tandem with stocks, she said.

For example, the benchmark 30-year U.S. Treasury bond, or long bond, returned a stellar 5.6 percent in the third quarter ending Sept. 30, while corporate junk bonds dropped 7.2 percent, according to CDA Wiesenberger, a mutual fund research company. This was the best performance by the long bond since the fourth quarter of 1995, and it came as the U.S. stock market declined 16 percent.

Also, as interest rates have fallen to their lowest levels in 30 years, buying bonds now would be similar to buying stocks at the peak of a bull market, Ms. Holman said.

Most financial advisers encourage clients to allocate 10 percent to 20 percent of their investment portfolios to bonds. Done correctly, this helps smooth volatility and still provide about the same long-term return as all-stock portfolios, said Ron Speaker, manager of Janus Fixed Income fund.

Dividend payouts get stingier

Are you getting fewer dividend increases than last year? "Higher payouts to stockholders showed a year-to-year decline in October, the fourth consecutive drop," says S&P Outlook. "Dividend policies are stingier because heated competition squeezes profit margins. Increases are the fewest since 1995."

Here's advice from the 1999 Stock Trader's Almanac:

"In this game, the market has to keep pitching but you don't have to swing. Keep the bat on your shoulder until you get a fat pitch." (Warren Buffett.)

"News on stocks is not important. How investors react to news is important." (Michael Burke, Chartcraft.)

"Better to sell 'too late' than 'too soon' in a momentum driven market as stocks often go much, much higher." (Jordan Kimmel, money manager.)

"Only buy stocks when they decline 10 percent from level of a year ago. This happens only once or twice a decade." (Eugene Brody.)

"Japanese stocks are about where U.S. stocks were in 1982, just ahead of this country's greatest bull market." (Marc Faber.)

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