Weighted average borrowing rate of interest

Consolidating your student loans would use your weighted average interest rate for your new loan for a Direct Consolidation. Use the calculator below to see what your weighted average would be. Student loans do not have the same interest rates year after year. Congress can change federal student loan rates each year and private loan rates depend on variable factors like credit score. This leaves most four-year college students with student loans of varying amounts and interest rates. Simply put, a weighted average interest rate is the overall interest rate on all of your debt combined.

Weighted Averages and Student Loans

The repayment term is determined by the total amount you owe. If you have good credit, you can refinance both federal loans and private loans through a private lender. Student loan refinance calculator : Use this calculator to compare your current loan payment or multiple payments with a refinanced student loan. Student loan consolidation calculator : Use this calculator to compare your payments under federal loan consolidation plans with your current bills.

Discretionary income calculator : Use this calculator to determine what you would pay under federal income-driven repayment plans. Student loan affordability calculator : Use this calculator to determine an affordable monthly student loan payment and how much that allows you to borrow for college.

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. We want to hear from you and encourage a lively discussion among our users.

Please help us keep our site clean and safe by following our posting guidelines , and avoid disclosing personal or sensitive information such as bank account or phone numbers.

Any comments posted under NerdWallet's official account are not reviewed or endorsed by representatives of financial institutions affiliated with the reviewed products, unless explicitly stated otherwise.

Divide the total per loan weight factor by the total loan amount. Multiply this by to express it as a percentage. This will give you the actual interest rate. $2, /. Divide the "total per loan weight factor" by the "total loan amount," and then multiply by to calculate the weighted average. ( / 12,) x or x

The interest rate on a federal consolidation loan is based on the weighted average of the interest rates on the federal student loans that are combined into the consolidation loan. The weighted average combines the interest rates into a single interest rate that yields a combined cost that is about the same as the cost of the original separate loans. Follow the example below to calculate the weighted average interest rate for a federal loan consolidation. This example assumes that there are three loans, each with a different interest rate.

This calculator will help you compute the average combined interest rate you are paying on up to fifteen of your outstanding debts.

Summary: To calculate the weighted average interest rate of all your loans, multiply each loan amount by its interest rate. Add the results together, then divide that number by the sum of all your loan balances.

Weighted Average Interest Rate Calculator

Are you tired of managing multiple federal student loan payments, with multiple interest rates or multiple servicers? If so, now may be the time for loan consolidation. The U. Department of Education made the landmark decision to allow you to choose your consolidation servicer of which, Great Lakes is one under the Direct Consolidation Loan program. The interest rate on a Direct Consolidation loan uses the weighted average interest rate from the loans you want to consolidate. Follow these six steps to estimate the weighted average interest rate.

Weighted Average Coupon (WAC)

The repayment term is determined by the total amount you owe. If you have good credit, you can refinance both federal loans and private loans through a private lender. Student loan refinance calculator : Use this calculator to compare your current loan payment or multiple payments with a refinanced student loan. Student loan consolidation calculator : Use this calculator to compare your payments under federal loan consolidation plans with your current bills. Discretionary income calculator : Use this calculator to determine what you would pay under federal income-driven repayment plans. Student loan affordability calculator : Use this calculator to determine an affordable monthly student loan payment and how much that allows you to borrow for college. Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page.

With the rising number of student loan borrowers utilizing from the various benefits offered by federal and private loans alike, comes along with the responsibility of timely repayment of the loans. Sometimes it becomes tiring to manage multiple federal student loan payments, coupled with multiple interest rates and multiple servicers.

The weighted average coupon WAC is a measurement of the rate of return on a pool of mortgages that is sold to investors as a mortgage-backed security MBS. The underlying mortgages are repaid at different lengths of time, so the WAC represents its return at the time it was issued and may differ from its WAC later. Banks routinely sell the mortgages they issue on a secondary mortgage market. The buyers are institutional investors such as hedge funds, and investment banks.

Considering Consolidation?

Calculate the weighted average of interest rates in Microsoft Excel to compute the most accurate average interest rate among a group of lenders who received different rates. When you take a weighted average, you take into account not only the values at hand, but also the number of times each occurs in the data set. If 20 people received one interest rate but just 10 received another, for example, the rate 20 people received gets double "weight" in the calculation. Launch Excel. Start with the new spreadsheet that appears when you open the program, even if you've already begun entering data in a new one. Label column A of the spreadsheet as "Rate;" then label column B "Recipients. Replace the cell name values with the correct range of cells your data occupies. If you have ten different rates, for example, your ranges would end at "A12" and "B12," rather than "A3" and "B3. Robert Schrader is a writer, photographer, world traveler and creator of the award-winning blog Leave Your Daily Hell. When he's not out globetrotting, you can find him in beautiful Austin, TX, where he lives with his partner. Skip to main content.

Weighted Average Interest Rate

Find My Rate. One of the best reasons to refinance or consolidate student loans is to obtain a lower interest rate, thereby helping you save money over the life of your loan. During the refinancing or consolidation process, you may wonder how your interest rate might change or how the new interest rate is calculated and applied across multiple loans, especially when they include a variety of high and low rates. Both of these questions, as well as a few others associated with a student loan debt consolidation, will be answered as we explore the definition, process, loan association, and calculation of weighted averages. Mathematically defined :. It is an average in which each quantity to be averaged is assigned a weight, and these weightings determine the relative importance of each quantity on the average. Weightings are the equivalent of having that many like items with the same value involved in the average. While lofty in explanation, the mathematical definition does emphasize one important clue: weighted averages determine the relative importance of each quantity in the average.