Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Consolidation blends several loans into one, and the new rate is the balance-weighted average of the old ones. Loans of $25,000 at 5 percent, $35,000 at 6.5 percent and $20,000 at 7.2 percent average to about 6.2 percent on $80,000, or about $4,965 of interest a year. The average does not lower the cost. It only simplifies payments, and it can change which repayment programs you qualify for, since some benefits are lost on a consolidated loan.
Before you rely on it
What to check
Check what you give up before you consolidate, such as credit toward forgiveness or a lower rate on one of the loans. The official rounding rule can also move the final rate slightly.
The common error
Where people go wrong with student loan consolidation rate calculator
Expecting consolidation to reduce the interest rate. The federal weighted average is not a discount, and a better rate usually needs a refinance with different terms.
Sensitivity evidence
How loan a balance changes the weighted average rate
| Loan A balance | Weighted average rate | Total consolidation balance | Annual interest at weighted rate |
|---|---|---|---|
| $20,000 | 6.3% | $75,000 | $4,715 |
| $22,500 | 6.2% | $77,500 | $4,840 |
| $25,000worked example | 6.2% | $80,000 | $4,965 |
| $27,500 | 6.2% | $82,500 | $5,090 |
| $30,000 | 6.1% | $85,000 | $5,215 |
Every input, tested
Which input moves the weighted average rate most
| Input | Tested from | To | Weighted average rate at each end | Swing |
|---|---|---|---|---|
| Loan B rate | 5.5% | 7.5% | 5.8% to 6.6% | 0.875% (14%) |
| Loan A rate | 4.0% | 6.0% | 5.9% to 6.5% | 0.625% (10%) |
| Loan C rate | 6.2% | 8.2% | 6.0% to 6.5% | 0.500% (8.1%) |
| Loan A balance | $22,500 | $27,500 | 6.2% to 6.2% | 0.075% (1.2%) |
| Loan C balance | $18,000 | $22,000 | 6.2% to 6.2% | 0.050% (0.8%) |
| Loan B balance | $31,500 | $38,500 | 6.2% to 6.2% | 0.026% (0.4%) |
Two variables at once
Weighted average rate by loan a balance and loan a rate
| Loan A balance \ Loan A rate | 3.0% | 5.0% | 7.0% |
|---|---|---|---|
| $20,000 | 5.8% | 6.3% | 6.8% |
| $22,500 | 5.7% | 6.2% | 6.8% |
| $25,000 | 5.6% | 6.2% | 6.8% |
| $27,500 | 5.5% | 6.2% | 6.8% |
| $30,000 | 5.4% | 6.1% | 6.8% |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Loan A balance | $25,000 |
| Loan A rate | 5.0% |
| Loan B balance | $35,000 |
| Loan B rate | 6.5% |
| Loan C balance | $20,000 |
| Loan C rate | 7.2% |
| Weighted average rate | 6.2% |
| Total consolidation balance | $80,000 |
| Annual interest at weighted rate | $4,965 |
Where the inputs come from
Enter each federal loan's balance and interest rate from your servicer, up to three loans in this tool. A Direct Consolidation Loan combines federal loans into one with a rate equal to the weighted average of the old rates, rounded up to the nearest one-eighth of a percent. The weighted average uses balances, so a large loan influences it more. Private loans cannot be included in a federal consolidation.
Using the weighted average rate in a real decision
The benefits are simplicity, one payment, and in some cases access to income-driven repayment or PSLF for older loan types. The costs can include losing credit for payments already made toward forgiveness.
When the result stops applying
Consolidating can reset or change forgiveness progress, capitalize unpaid interest and lengthen the term, so check the effect before you apply. Rounding adds a small amount. Rules and tools available for consolidation have changed, so verify the current rules. Private refinancing is different and can lower the rate but ends federal protections.
What to compare it with
Compare private refinancing on the student loan refinance calculator, and the payment on the student loan payment page. The PSLF and income-driven repayment calculators show forgiveness paths, and the student loan capitalization page shows what happens to unpaid interest.
People also ask
Frequently asked questions
Does consolidation lower my interest rate?
No. The new federal rate is the weighted average of the old rates, rounded up to the nearest one-eighth of a percent, so it is about the same.
Why consolidate federal loans?
To combine several payments into one, to become eligible for certain repayment plans or forgiveness programs, or to change loan types.
Does consolidating affect my PSLF progress?
It can. Depending on the rules in effect, consolidation may reset or average qualifying payment counts, so check before consolidating.