Consolidating loans into direct loans nobluffdating com
One of the myths of consolidation is that it makes your debt less expensive by lowering your interest rate.
This is often the reason that people cite when they say you shouldn’t combine federal and private loans.
But that hasn't been the case for the past decade, since the government stopped issuing student loans with variable rates.
If you consolidate your loans now, your new rate will be based on a weighted average of all your loans' interest rates.
In the process of consolidation, each original loan is paid in full and a new Direct Consolidation Loan is originated for the combined balance of the consolidated loans.
ED determines the interest rate of the Direct Consolidation Loan by taking the weighted average of the interest rates on your existing loans and rounding up to the nearest 1/8 of a percent (0.125).