How will my student loan consolidation interest rate be calculated?
Your consolidated interest rate will be based on the weighted average of the interest rates of the student loans being consolidated. That’s just a complicated way of saying that the interest rates on your larger student loans will affect your consolidated rate more than the interest rates on your smaller student loans. (If you want to know exactly how the weighted average interest rate is calculated, see below.) The weighted average is then rounded up to the nearest 0.125%, with a maximum rate of 8.25%. This will be your fixed interest rate on your Federal Consolidation Loan. To calculate your weighted average interest rate: 1. Add up the outstanding loan amounts on the student loans you’re consolidating to determine your total student loan Consolidation Amount. For example, if you’re consolidating three college loans: Loan 1 amount + Loan 2 amount + Loan 3 amount = Consolidation Amount 2. Divide each outstanding loan amount by the Consolidation Amount you calculated in Step 1 to deter