The government reduces a borrower’s interest rate when consolidating variable rate Stafford loans by 0.6% if the loans are consolidated during the borrower’s six-month grace period. The current interest rate for variable rate Stafford borrowers in-grace is 6.54% (on variable rate loans). Consolidating during the grace period will fix the interest rate at 6.625%. The following table depicts the monthly payments of a borrower who has consolidated during his/her grace period.
Review Consolidation Loan Payment Examples
| Student Loan Debt | Monthly Payments Before Consolidation* 10 Year Standard Loan Term | Monthly Payments After Consolidation 20 Year Loan Term | Monthly Payments After Consolidation 30 Year Standard Loan Term |
|---|---|---|---|
| $60,000 | $685 | $452 | $384 |
| $80,000 | $913 | $602 | $512 |
| $100,000 | $1,142 | $753 | $640 |
| $120,000 | $1,370 | $904 | $768 |
| $150,000 | $1,713 | $1,129 | $782 |
Source: College Loan Corporation |
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*For comparison purposes, this scenario assumes borrower makes monthly payments during grace period at the grace period interest rate.
The current interest rate for variable rate Stafford borrowers in repayment on unconsolidated loans is 7.14%. Consolidating during repayment will fix the interest rate at 7.25% over the life of the borrower's loans.
The current interest rate for variable rate Stafford borrowers in repayment on unconsolidated loans is 7.14%. Consolidating during repayment will fix the interest rate at 7.25% over the life of the borrower's loans.
| Student Loan Debt | Monthly Payments Before Consolidation 10 Year Standard Loan Term | Monthly Payments After Consolidation 20 Year Loan Term | Monthly Payments After Consolidation 30 Year Standard Loan Term |
|---|---|---|---|
| $60,000 | $704 | $474 | $409 |
| $80,000 | $939 | $632 | $545 |
| $100,000 | $1,174 | $790 | $682 |
| $120,000 | $1,409 | $948 | $819 |
| $150,000 | $1,761 | $1,186 | $1,023 |
Source: College Loan Corporation |
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Note: If borrower takes the entire 30-year term to pay back the loan, he/she could save $15,120 by consolidating during the grace period (with $100,000 balance).
