Life in The World

If you have several student loans, you can convert them into a single Federal Consolidation Loan with one interest rate and repayment schedule. When a lender agrees to consolidate your loans, it will pay off the outstanding balance (including the remaining principal and interest) on your existing loans and make one Federal Consolidation Loan to replace them. The interest rate on a Consolidation Loan is the “weighted average” of the interest rates on the loans being consolidated. In the example, if the Stafford interest rate is 7.5% at the time of consolidation, the rate on the Consolidation Loan (including the 6% Perkins loan) would be 7.235%. Depending on the loan amount, Consolidation loans can be repaid over 10-30 years. This may be longer than the repayment period on your current loans. A longer repayment period means a lower monthly payment—but it also means that you’ll be paying more interest over the life of the loan, so your total repayment amount will be higher. If you’...