Case 1
- Loan 1 balance
- 20000
- Loan 1 rate
- 6.8%
- Loan 2 balance
- 10000
- Loan 2 rate
- 7.9%
- Loan 3 balance
- 10000
- Loan 3 rate
- 5.41%
6.728%
Open with these valuesBlended Rate Calculator
6.728%
Result: 6.728 %A blended rate weights each loan's rate by its balance: multiply balance by rate, add the products, divide by the total balance. 20,000 at 6.80% plus 10,000 at 7.90% plus 10,000 at 5.41% blends to 6.7275%. A plain average of the three rates would say 6.70%, which is wrong.
The numbers at a glance
Held fixed: Loan 1 balance 20,000.00, Loan 1 rate 6.800 %, Loan 2 balance 10,000.00, Loan 2 rate 7.900 %, Loan 3 balance 10,000.00.
| Loan 3 rate (%) | Result (%) |
|---|---|
| 0.000 | 5.375 |
| 2.000 | 5.875 |
| 4.000 | 6.375 |
| 5.410Your value | 6.728 |
| 6.000 | 6.875 |
| 8.000 | 7.375 |
| 10.000 | 7.875 |
Worked examples
Case 2
- Loan 1 balance
- 5000
- Loan 1 rate
- 3.8%
- Loan 2 balance
- 10000
- Loan 2 rate
- 5.7%
- Loan 3 balance
- 10000
- Loan 3 rate
- 5.41%
5.204%
Open with these valuesCase 3
- Loan 1 balance
- 25000
- Loan 1 rate
- 5%
- Loan 2 balance
- 15000
- Loan 2 rate
- 3%
- Loan 3 balance
- 10000
- Loan 3 rate
- 5.41%
4.482%
Open with these valuesHow it's calculated
blended rate = Σ(balance × rate) ÷ Σ(balance)
- StepEnter each loan's outstanding balance and its annual rate.
- StepLeave a balance at zero for any slot you do not need.
- StepEach balance times its rate is that loan's weight factor.
- ResultThe weight factors added up, divided by the total balance, is the blended rate.
What this number means
A blended rate answers one question: if all of these loans were a single loan, what rate would it carry? The answer is not the average of the rates, because a larger balance generates more interest and therefore deserves more weight. Federal Student Aid spells out the method used for consolidation loans — multiply each balance by its rate to get a per-loan weight factor, add the factors, add the balances, and divide the first sum by the second. Take the preset: 20,000 at 6.80% contributes 1,360, 10,000 at 7.90% contributes 790, and 10,000 at 5.41% contributes 541. The factors total 2,691 against a total balance of 40,000, so the blended rate is 6.7275%. A plain average of the three rates would have said 6.70%. That is also the rate which, applied to the whole 40,000, produces the same annual interest as the three loans do separately, which is what makes it a fair benchmark for a refinance offer. Two limits are worth carrying away. The figure here is unrounded, while a US Direct Consolidation Loan rounds up to the next one-eighth of a percent. And a blended rate is a snapshot: as the loans are repaid at different speeds their weights shift, so the rate moves even when no lender changes anything. It also says nothing about term or fees, which decide the total cost.
The method, step by step
Federal Student Aid describes it as multiplying each loan amount by its rate to get a per-loan weight factor, adding those, then dividing by the total amount. That is exactly what this page does.
No rounding to the nearest eighth here
A US Direct Consolidation Loan rounds the weighted average up to the next one-eighth of a percent. This calculator shows the unrounded figure, so a real consolidation quote can land slightly higher.
Use today's balances, not the original amounts
Interest accrues on what you still owe, so the weights are the current payoff balances. The blended rate therefore drifts as the loans are repaid at different speeds.
It is the benchmark a refinance must beat
Any single loan offered to replace all of them has to price below your blended rate to be cheaper on interest. Term and fees are a separate question.
Commonly misread
Just average the rates: 6.80, 7.90 and 5.41 give 6.70 %.
A plain average assumes all three loans are the same size. Weighted by their balances the answer is 6.7275 %, and the gap grows as the balances diverge.
I should enter the amounts I originally borrowed.
Interest is charged on what is still outstanding, so the weights are today's balances. Original amounts would overweight the loans you have already paid down.
My consolidation loan will carry exactly this rate.
A US Direct Consolidation Loan rounds up to the next one-eighth of a percent, and private lenders price on credit rather than on your average. Treat this as the benchmark, not the quote.
A lower blended rate always means I pay less interest.
Only at the same term. Stretching the same rate over twice as many years costs far more in total interest.
Reference table
| Loans (balance at rate) | Blended rate in % |
|---|---|
| 20000 at 6.80 %, 10000 at 7.90 %, 10000 at 5.41 % | 6.7275 |
| 5000 at 3.80 %, 10000 at 5.70 %, 15000 at 6.80 % | 5.9333 |
| 25000 at 5 %, 15000 at 3 %, 10000 at 7 % | 4.8 |
| 5500 at 4.529 %, 6500 at 2.75 %, 0 at 0 % | 3.565375 |
| 1000000 at 6 %, 500000 at 8 %, 0 at 0 % | 6.667 |
Questions
How do you calculate a blended interest rate?
Multiply each loan's balance by its rate, add the products, and divide by the sum of the balances. For 20,000 at 6.80% and 10,000 at 7.90%, that is 2,150 divided by 30,000, or 7.167%.
Why not just average the rates?
A plain average assumes every loan is the same size. Weighting by balance is the only way to get a rate that reproduces the interest your loans actually generate.
Which balances should I enter?
The current outstanding balances, not the amounts originally borrowed. Interest accrues on what you still owe.
Is this the rate a consolidation loan would give me?
Close, but not exactly. A US Direct Consolidation Loan rounds the weighted average up to the next one-eighth of a percent, and private lenders price on credit instead.
Can I use it for two loans instead of three?
Yes — leave the third balance at zero. A balance of zero adds nothing to the weight factors and nothing to the total.
Does the blended rate stay the same over time?
No. As the loans are repaid at different speeds the weights shift, so the blended rate moves even when the individual rates do not.
Sources and last check
Information, not financial advice.