Best consolidatings student loans information
The new Direct Consolidation Loan provides a single fixed interest rate that is equal to the weighted average of all the loans being consolidated, and the interest rate is rounded up to the nearest eighth of a percent (0.123%).
A weighted average means that the loans with a higher balance influence the interest rate more than loans with a smaller balance – the overall impact of each old loan on the new interest rate is proportional to the comparative balance of that loan.
A federal student loan consolidation calculator provided by US Bank was used to calculate the weighted average.
Borrowers who are out of college or are attending classes less than half-time can consolidate their federal student loans.
Student loan debt is a grave concern in modern America.
The picture painted by these statistics is clear: many borrowers are in over their heads with student loan debt and are looking for relief.The following table illustrates how a weighted average works.In this example, there are three students that each have three loans.Getting a federal consolidation loan isn’t usually considered as “refinancing” since the interest rate of the new loan is equal to the weighted average of the loans being consolidated.With a private consolidation loan, a private lender writes a new loan that pays off the old loans.
The new interest rate can be lower or higher than the weighted average of the old loans and can be fixed (the interest rate won’t ever change) or variable (the rate changes based on the market conditions).