Stafford Loan Consolidation: Calculating the Weighted Average Interest Rate
Calculating the Weighted Average Interest Rate
Follow the example below to calculate the weighted average interest rate for a federal student loan consolidation.
Step 1
Multiply each loan by its interest rate to obtain the per loan weight factor.
$10,000 * 6.543% = 654.3
$5,000 * 7.943% = 397.5
Step 2
Add the per loan weight factors together.
654.3 + 397.5 = 1051.8
Step 3
Add the loan amounts together.
$10,000 + $5,000 = $15,000
Step 4
Divide the total per loan weight factor by the total loan amount and then multiply by 100. This will give you the actual interest rate.
1051.8 / $15,000 = 7.012%
Step 5
Then round to the next nearest 1/8%.
7.012% to the nearest 1/8% = 7.012%
Your estimated consolidation interest rate would then be 7.012%.
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