The advantage to trying to consolidate your student loans is that it is likely to be a less expensive way to pay out your loan with a better than expected interest rate. If you need to pay your loans out over a longer period of time, say twenty years, then, although you will have a lower monthly payment, you should know that you will wind up paying more interest over the longer period of time. That means it will cost you more in the overall picture. If you are trying to figure out what the consolidation loan interest rate would be if you were you to try this method of loan repayment there is a formula that can be followed to tell you if it going to work for you.



Determining the consolidation loan interest rate is done by taking the loans you already have, calculating the weighted average of the interest on those loans and then rounding that rate up by one eighth of a percent. That will give you the interest rate that you can expect to pay. This rate will then by locked in until for the full life of the loan no matter how long it will be.

The weighted average is determined by multiply the interest rates by the amount of the loan. This is called the per loan weight factor. Once you have these numbers add the loan weight factors up. Then add together the total of your outstanding loans. Once you have this number take the total per loan weight factor and divide it by the total loan amount. Take the number you get and multiply it by one hundred. You then take this answer and round it up to the next one eighth percent. With this resulting number you compare it to eight point twenty five percent. Whichever number is the lower one will be the consolidation loan interest rate that you will have for the lifetime of your loan. It may seem like a lot to figure out. It may seem like a long commitment to paying off the one loan when you feel you could just as easily pay your student loans a little bit against each one each month. But the truth is this really is the best way for a student to get out of debt.