Interest rates for consolidating federal student loans
When these students graduate, some companies wrap the interest owed into the principal amount the student owes, and that bigger amount is used as the base the interest fees are applied to.
Federal consolidation loans can only be used for federal student loans, but private consolidation loans can be used for both federal private student loans.However, private loans can’t be included in a federal consolidation loan.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%).In 2017-2018, Direct Subsidized Loans come with a 4.45% interest rate, according to the U. Department of Education, which is much lower than the rate used in the private marketplace.In addition to the low rate, students who get loans like this aren’t responsible for interest payments during their time in school. That could help students to save a significant amount of money during the life of the loan.
Consolidation loans repay old loans with a brand new loan that has its own unique terms and conditions.