Your federal student loan consolidation rate of interest is the weighted common of your federal loans’ rates of interest, rounded as much as the following one-eighth of 1 share level. That means bigger loans issue extra considerably into your ultimate rate of interest.
See your consolidation price
How federal loan consolidation charges work
Consolidation simplifies your cost. When you consolidate federal loans, you mix a number of loans into one, which leaves you with a single month-to-month cost. For instance, consolidating a $10,000 loan at 5% curiosity with a $20,000 loan at 7% curiosity provides you with a 6.33% weighted common rate of interest. That could be rounded as much as 6.375%.
Your rate of interest will keep the identical. There’s no restrict to how excessive your rate of interest might be, nevertheless it received’t change all through your reimbursement time period.
Consolidation will not decrease how a lot you pay general. You received’t pay much less curiosity by consolidating student loans. Your funds is likely to be decrease as a result of your funds are prolonged.
It helps you qualify for different reimbursement plans and forgiveness, should you qualify. Consolidation may additionally provide help to qualify for sure income-driven reimbursement plans and forgiveness packages. You don’t must consolidate all of your federal loans — you may select to consolidate solely people who want it. For occasion, you will need to first consolidate dad or mum PLUS loans earlier than switching to the income-contingent reimbursement plan. You additionally should consolidate Perkins loans or these from the Family Education Loan Program so as to qualify them for Public Service Loan Forgiveness.
You by no means must pay to do it. Consolidation is all the time free. Consolidate your federal loans on studentloans.gov.
Other methods to chop your student loan rate of interest
If you’re inquisitive about saving cash on curiosity, refinancing student loans could also be a greater wager than federal student loan consolidation.
You can refinance each federal and personal loans, not simply federal loans. Refinancing is good for high-interest non-public loans particularly, because you’ll lose entry to sure protections should you refinance federal loans.
Not everybody will qualify for refinancing. Your rate of interest will rely in your credit rating, earnings and different elements.
You may decrease your student loan rate of interest by signing up for automated month-to-month funds by means of your lender or getting a loyalty low cost if in case you have a personal loan by means of a bank that provides one.