Oh, I see what you're saying. I was thinking about my situation, where consolidating IN-school (FFELP) forced us to waive the grace (-this was in 2005 and 2006 when interest rates were 2-3%) I think the poster and you were both referring to consolidation at the end of medschool only (right?)
Anyways, here is something I found that spells it out a little more clearly: (or, clear as mud?)
"If your loans are in the grace period and you wish to consolidate, please remember that once you have consolidated and the loan is issued, you will lose the remainder of your grace period (even if it's a Direct Loan Consolidation) and payment on the loan will begin in 60 days. Therefore, it makes sense to begin the application at a later point in your grace period to take full advantage of the process unless rates increase significantly. (Many lenders will put the application into "hold" status until nearing the end of the grace period. This will enable you to take full advantage of the whole grace period and let you "hold" lower rates available prior to July 1, 2006.).
As if it were not confusing enough, there are two different federal student loan structures – Direct Loans are made by the federal government directly; FFELP loans are made by private lenders but are guaranteed by the federal government. Students with loans issued in the Direct Loan program are allowed to consolidate loans while they are still in school AND still obtain a 6-month grace period on their consolidation loan. FFELP loan holders are not allowed to consolidate loans while they are still in school.
However, many FFELP lenders will tell you that there are ways to consolidate your FFELP loans while still in school by asking your lender(s) to put your existing loans into repayment status. This does a couple of things: first, you would lose your grace period on the loans and would have to begin repaying right away. However, if you place the loans into repayment, they are now eligible for consolidation (but at the higher repayment rate – remember the .60% benefit described above – so you may lose the benefit of a lower rate)."
anyhoo, thanks for the info, feded!