Considering Consolidation?

What Is Your Estimated New Interest Rate?

The interest rate on a Direct Consolidation loan uses the weighted average interest rate from the loans you want to consolidate. Follow these six steps to estimate the weighted average interest rate.

Example:

1. Multiply each loan amount by its interest rate to obtain the "per loan weight factor."

   Loan 1: $10,000 x 6.8% = 680

   Loan 2: $2,000 x 3.8% = 76

2. Add the per loan weight factors together.

   680 + 76 = 756

3. Add the loan amounts together.

   $10,000 + $2,000 = $12,000

4. Divide the "total per loan weight factor" by the "total loan amount," and then multiply by 100 to calculate the weighted average.

   (756 / 12,000) x 100

   or 0.063 x 100 = 6.3%

5. Round Step 4's result to the nearest higher one-eighth of one percent* if it's not already on an eighth of a percent.

   Round 6.3 up to 6.375

6. SAVE
   Sign up for Auto Pay, our free electronic monthly payment service, and your lender (the U.S. Department of Education) will give you a 0.25% interest rate reduction.

   After signing up for Auto Pay for free, reduce your interest rate by 0.25, or to 6.125 in this example.

*1/8^th of 1% includes:
0.125  |  0.250  |  0.375  |  0.500  |  0.625  |  0.750  |  0.875  |  1.000

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