Federal Consolidation Rates & Terms

student loan article

Interest Rate Formula

The interest rate on a Federal Consolidation Loan is based on guidelines established by the federal government for all lenders under the Federal Family Education Loan Program. It is determined by calculating the weighted average of the existing loans being consolidated rounded up to the nearest one-eighth percent, not to exceed 8.25%. The loan carries a fixed interest rate for the life of the loan.

(Balance Loan 1 x Interest Rate Loan 1) + (Balance Loan 2 x Interest Rate Loan 2)= Weighted Average Interest Rate
Balance Loan 1 + Balance Loan 2

Please use our Federal Consolidation Loan Calculator to help determine your consolidation interest rate.

Rates Effective July 1, 2007

 Date DisbursedGrace Period RateRepayment Rate
Stafford7/2006 – present6.80%6.80%
7/1998 – 6/20066.62%7.22%
7/1995 – 6/19987.42%8.02%
7/1992 – 6/19958.02%8.02%
Prior to 7/19928.17%8.17%
Plus7/2006 – present8.50%8.50%
7/1998 – 6/20068.02%8.02%
7/1992 – 6/19988.42%8.42%
7/1987 – 6/19928.57%8.57%
Grad Plus7/2006 – present8.50%8.50%
 Fixed Rates  

Repayment Term

The length of your repayment term is based on guidelines established by the federal government. The repayment term is based on the total balance of your student loans to be consolidated not to exceed the maximum term allowed (30 years).

Total Student Loan DebtAvailable Repayment Term
$10,000 – $19,999Up to 15 years
$20,000 – $39,999Up to 20 years
$40,000 – $59,999Up to 25 years
$60,000 and greaterUp to 30 years

Repayment Plans

There are a several options to choose from:

Standard Repayment – This is a level repayment option wherein the payment amount remains the same throughout the entire life of the loan. The borrower will pay the least amount of interest over the term of the loan with this option.

Graduated Repayment – This repayment plan supplies you with the lowest initial monthly payment, and increases over the term of the loan. By making the lowest initial monthly payment, borrowers may pay more interest over the life of the loan. Borrowers may prepay the loan without penalty.

Extended Repayment – If your balance falls between $30,000 and $39,999 you are able to extend your term an additional 5 years (from 20 to 25 years). This option can be used with the standard or graduated payment plan.