Does consolidating student loans lower interest rate

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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.In short, the term “consolidation” is used to describe the process of combining multiple loans into a single loan while the term “refinancing” is used to describe the process of using a more advantageous loan to repay an older loan.While refinancing is often used in other realms of finance (like mortgages) to describe repaying a single older loan with a new loan, consolidating with a private loan technically includes refinancing as well since the term and interest rate of the new loan are different from 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).Private and federal loans can both be refinanced with a private consolidation loan.The last section is dedicated to identifying the best private consolidation loans for those with a few different financial profiles.

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However, some lenders also factor in the borrower’s current financial and professional circumstances.

Student loan debt is a grave concern in modern America.

In fact, the amount of debt from student loans topped

However, some lenders also factor in the borrower’s current financial and professional circumstances.

Student loan debt is a grave concern in modern America.

In fact, the amount of debt from student loans topped $1.3 trillion at the end of 2016, and 68% of seniors graduating from public and nonprofit colleges have student debt – the average is $30,100.

Because the interest rate is a weighted average and rounded up, borrowers won’t ever save money on interest by opting for a federal consolidation loan unless the loans are pre-2006 and have a variable interest rate.

The new interest rate would still be equal to the current interest rates in that situation, but it might save money in the future if the variable rates rise (the new fixed rate would stay the same).

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However, some lenders also factor in the borrower’s current financial and professional circumstances.Student loan debt is a grave concern in modern America.In fact, the amount of debt from student loans topped $1.3 trillion at the end of 2016, and 68% of seniors graduating from public and nonprofit colleges have student debt – the average is $30,100.Because the interest rate is a weighted average and rounded up, borrowers won’t ever save money on interest by opting for a federal consolidation loan unless the loans are pre-2006 and have a variable interest rate.The new interest rate would still be equal to the current interest rates in that situation, but it might save money in the future if the variable rates rise (the new fixed rate would stay the same).

.3 trillion at the end of 2016, and 68% of seniors graduating from public and nonprofit colleges have student debt – the average is ,100.

Because the interest rate is a weighted average and rounded up, borrowers won’t ever save money on interest by opting for a federal consolidation loan unless the loans are pre-2006 and have a variable interest rate.

The new interest rate would still be equal to the current interest rates in that situation, but it might save money in the future if the variable rates rise (the new fixed rate would stay the same).

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