When you consolidate your multiple loans, the loans company will invariably negotiate lower rates of interest with each of your outstanding creditors. The result is a student loan consolidation rate much lower than the average of the multiple lenders. This saves the student money through lower monthly repayment.
Federal Student Consolidation Loan Rates
Federal student loan consolidation rates are variable. The rates are determined by the type of loan and the date of issue. Rates of federal loans are weighted averages of all the rates of the federal loans that are consolidated and they are rounded to the nearest one-eight of one percent [1/8%]. Federal loans are capped below 8.25%.
The Stafford and PLUS federal loans, issued from July 1st 1998 to June 30th 2006 have rates that reset in July of every year, allowing you to weigh up if federal loans are for you.
Private Alternative Consolidation Loan Interest Rates
Rates of private consolidation loans vary on a monthly basis under the Nelnet program. These rates are based on the Prime Rate, published on the first day of each month. Rates are also subject to variation up to 4.75%.