Your federal student loan consolidation interest rate is the weighted average of your federal loan interest rates, rounded up to the nearest eighth of a percentage point. This means that larger loans are more important in your final interest rate.
See your consolidation rate
How Federal Loan Consolidation Rates Work
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Consolidation simplifies your payment. When you consolidate federal loans, you combine multiple loans into one, leaving you with one monthly payment. For example, consolidating a $10,000 loan at 5% interest with a $20,000 loan at 7% interest will give you a weighted average interest rate of 6.33%. This would be rounded up to 6.375%.
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Your interest rate will remain the same. There is no limit to the amount of your interest rate, but it will not change for the duration of your repayment.
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Consolidation will not reduce the total amount you pay. You won’t pay less interest by consolidating your student loans. Your payments may be lower because your payments are extended.
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It helps you qualify for other repayment plans and a rebate, if you qualify. Consolidation could also help you qualify for certain income-driven repayment plans and forgiveness programs. You don’t have to consolidate all your federal loans – you can choose to consolidate only those that need it. For example, you must first consolidate parent PLUS loans before moving to the income-contingent repayment plan. You must also consolidate Perkins loans or those from the Family Education Loan Program in order to qualify for Cancellation of civil service loans.
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You never have to pay to do this. Grouping is always free. Consolidate your federal loans on studentloans.gov.
Other Ways to Lower Your Student Loan Interest Rate
If you want to save money on interest, student loan refinancing may be a better bet than federal student loan consolidation.
You can refinance federal and private loans, not just federal loans. Refinancing is ideal especially for high-interest private loans because you will lose access to certain protections if you refinance federal loans.
Not everyone will be eligible for refinancing. Your interest rate will depend on your credit score, income, and other factors.
You can also lower the interest rate on your student loan by subscribing to automatic monthly payments via your lender or by obtaining a loyalty discount if you have a private loan via a bank that offers one.