Student Loan Consolidation Rate

Student Loan Consolidation Rates are adjusted every year on July first. The rates are based on that year's student loan rate, which is in turn based on the 91-day Treasury Bill rate (Treasury bill rates can be found here) at the last auction in May of each calendar year.

Since the interest rate various and adjusts each year on July 1st, many borrowers determine whether or not to consolidate their student loan debt in early June when the new interest rates are announced. Keep in mind you may not want to wait if your grace or deferment period will end before July 1st. If you do, you could be locking in a higher in-repayment interest rate rather then the grace or deferment rate.

The consolidation rate for your loan is determined by the weighted average of all your loans consolidated rounded up to the nearest 0.125%. Typically (Depending on the year the various loans were taken) Stafford Loans will have a lower rate then PLUS loans, therefore if you are only consolidating Stafford loans the rate may be lower so pay attention to which loans are you are consolidating. Also keep in mind that PLUS Loans are borrowed in the parent's name and these cannot be consolidated with other federal education loans that are in the student's name.

If you have a variety of loans and are considering loan consolidation, you can calculate your weighted average by using the Loan Consolidation Worksheet at Mapping Your Future. You can also calculate your monthly payments at this site by using the Student Loan Calculator.

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