Student Loans

What rate would a consolidation loan carry?

The weighted average of your loans, rounded up to the next eighth of a percent as the Department rounds it, which is why consolidating is never quite rate-neutral.

Rate on the consolidation loan7.63%

The weighted average of your loans is 7.6050%. The Department rounds that up to the next eighth of a percent, not to the nearest one, which is why consolidating is never quite rate-neutral.

  • $60,000.00Total consolidated
  • 7.6050%Weighted average
  • 7.63%Rounded up to
  • $12.00Extra interest a year from the rounding

Consolidating now does something it did not do before

A new Direct Consolidation Loan is a loan first disbursed today. Any loan first disbursed on or after 1 July 2026 moves every one of your Direct Loans into the world where only the Repayment Assistance Plan and Tiered Standard are available, including loans you took out years earlier. Consolidating to reach Income-Based Repayment had to be done by 30 June 2026 and now achieves the opposite.

Consolidating also folds the accrued interest on the old loans into the principal of the new one. The Department does not call that a capitalization event, and the effect on what you owe is the same.

What consolidation actually does to the rate

It takes the weighted average of your loans and rounds it up to the next eighth of one percent. Up, not to the nearest. So consolidating always costs at least a little, and the common claim that you keep your average rate is not quite true.

The much bigger consideration in 2026

A Direct Consolidation Loan is a new loan, disbursed on the day it is made. Any loan first disbursed on or after 1 July 2026 moves all of your Direct Loans into the world where only the Repayment Assistance Plan and Tiered Standard exist. For years, consolidating was the standard way to reach Income-Based Repayment or to make FFEL loans eligible for public service forgiveness. Doing it now can close those doors instead of opening them.

Consolidation also folds accrued interest into the new principal. The Department does not list that as a capitalization event and it has exactly the same effect on what you owe.

Sources

  1. Repayment plans and important definitions, U.S. Department of Education. Checked on . Backs which plans are open to which borrowers from 1 July 2026; the Tiered Standard term brackets and its $50 minimum; the effect of a single post-cutover disbursement on all of a borrower's loans.
  2. Income-driven repayment plans, U.S. Department of Education. Checked on . Backs the IBR, PAYE and ICR formulas and forgiveness horizons.
  3. Court actions affecting income-driven repayment, U.S. Department of Education. Checked on . Backs the status of SAVE after the 10 March 2026 order; the 1% automatic debit reduction; that income-driven payment counters are not currently displaying.
  4. Reimagining and Improving Student Education (RISE): Federal Student Loan Program, final regulations, Office of the Federal Register. Checked on . Backs the regulation implementing the plan changes, effective 1 July 2026.
  5. Interest rates and fees for federal student loans, U.S. Department of Education. Checked on . Backs the two capitalization triggers on Direct Loans and Department-held FFEL loans; the four triggers on FFEL loans not held by the Department; the daily interest formula and its 365.25-day year; the worked example of a deferment on a $10,000 loan at 6.8%.
  6. How does interest accrue while I am in school?, Consumer Financial Protection Bureau. Checked on . Backs that private loan capitalization is set by contract rather than by regulation.
  7. Regulation Z, section 1026.47, private education loan disclosures, Consumer Financial Protection Bureau. Checked on . Backs the disclosure requirement at application, approval and consummation.

The rules behind this calculator were last checked on .

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