What is a Consolidation Loan?
A consolidation loan allows borrowers to take several federal loans with different repayment terms and interest rates, and combine them together to form one loan. The new loan will have only one payment per month. What is the interest rate on a consolidation loan? The rate for a consolidated loan is fixed for the entire time the loan is being repaid. The rate is calculated based on a weighted average of the interest rates on the loans being consolidated and is rounded up to the nearest 1/8 of a percent. This rate may be lower than some of the interest rates on the loans being consolidated. The interest rate will never exceed 8.25 percent. Can I consolidate my loans? If you are not in school you may be eligible to consolidate your loans. You should check with the lenders associated with the loans to see if consolidation is an option for you. Remember to review all of the terms of the consolidation loan to make sure that you will truly benefit from consolidation.
