Your fixed rate is determined by weighing the average interest rate being applied to your existing loans that are eligible for consolidation, and then rounding this rate up to the nearest one-eighth of one percent.
Please note, there is no interest rate cap on a Direct Consolidation Loan.
While getting a degree has great advantages, it can sometimes result in borrowers needing more than one federal student loan in order to graduate.
This can lead to the complicated process of making multiple monthly payments to student loan servicers, and a greater chance of missing payments, defaulting on loans, or struggling with your personal expenses until your loans are paid off. These loans include: If you have private loans, or you’d like to consolidate a Direct PLUS Loan made to your parents with a personal federal student loan, you won’t be able to use Federal Student Loan Consolidation as an option.
If you are approved for a Federal Student Loan Consolidation, your monthly payments will begin within 60 days of your loans being paid for by the Department of Education.
However, if you are still within the grace period for any loans being consolidated, you may be able to delay making payments until the grace period has ended by speaking with one of our student loan specialists.
Interest Rates and Fees The interest rate on a Federal Consolidation Loan is a fixed rate based on the weighted average of interest rates on the loans, rounded up to the nearest eighth of a point (multiple of 0.125%).
The interest rate on new consolidation loans has not been capped since July 1, 2013.
Notice how the weighted average is between the highest and lowest interest rates among the consolidated loans.
The use of the weighted average preserves the cost of the loans.
Married borrowers cannot consolidate their loans together for similar reasons.
Congress previously allowed joint consolidations, but repealed it effective July 1, 2006 because of the problems that arose when married borrowers divorced and the joint consolidation could not be undone.
The first step in determining your eligibility for Federal Student Loan Consolidation, also known as a Direct Consolidation Loan, is having a loan that qualifies under the U. However, you could be eligible for a Private Student Loan Consolidation, which usually offers the same benefits.