How is My Federal Consolidation Interest Rate Calculated?

So you’re getting ready to consolidate and are wondering what your interest rate will be. That’s certainly a fair question. I mean, when you go out to dinner you don’t pay for your meal before you eat it. You make sure you get what you ordered, that is tastes good, and that the temperature is to your liking. Then, at the end of the meal, you take out your credit card and sign on the dotted line.

Why should things be any different in the consolidation world? Don’t sign and then ask questions later. Get the answers you need up front.Here is an interesting federal consolidation fact. Ten students who graduate from the same university this May could very well have ten different interest rates. But how can this happen?Unlike in other financial circles federal consolidation interest rates are not tied to one thing in particular, like the Fed Funds Rate.

To arrive at your fixed interest rate the consolidation company simply takes the weighted average of all your loans. They look at the interest rate and the amount of each loan, then round up to the nearest eighth percent.Nowadays undergraduate students are coming out with rates ranging from 3.61% to 6.8%, and end up consolidating for about 5-6%. A lot of grad students carry grad plus loans at 8.5%, which elevates their fixed amount.

Consolidating Private Student Loans

I will give you information on Consolidating Private Student Loans.Private student loan consolidation is a great way to significantly lower your monthly loan payments by combining all your private student loans into one manageable loan. Private student loan consolidation reduces the stress of multiple payments, and allows you to budget accordingly to meet your payment as well as lowering your interest rate.

Other Benefits of Consolidating Private Student Loans :

• Lower Monthly Payments: With private student loan consolidation, most borrowers can reduce their monthly payment by extending the repayment term of their private student loan debt.
• Reduced Interest Rates: Borrowers with improved credit may often lower their interest rate. Existing loan holders will not reduce your interest rate if your credit has improved.
• Rate Reductions: Borrowers may apply on their own or with a credit-worthy co-signer for private student loan consolidation. Borrower and Co-signers with superior credit may receive lower APR loans.
• Internship/Residency & Military Deferment: A 48 month deferment for medical/dental residents and a 36 month deferment for all active-duty military personnel is available through the Graduate Leverage Private Student Loan Consolidation Program.
• Repayment Term: Undergraduate borrowers may receive up to a 25 year repayment term which offers the lowest possible monthly payment, and graduate student borrowers may receive up to a 30 year repayment term.
• No Prepayment Penalties: All payments in excess of scheduled payments go directly to principal.