Recently I received an email from the Government with the option to consolidate my Sallie Mae loans. Here is the the important part of the email I received:

"if you consolidate some of them now into a Special Direct Consolidation Loan, you will receive a 0.25% interest rate reduction from the current interest rate on each commercially-held Federal Family Education Loan Program loan as of the date it is consolidated."

My question is what would the interest rate on the consolidated loans be? As of now, both my sallie mae loans have interest rates of 2.625%. I'm assuming this rate would increase if the Government owned it (since their rate is higher), but I read something about keeping it the same.

Obviously I'm confused. Help!

And btw, these are undergraduate loans I've had for a while. Not GradPLUS/law school related.

It will be a weighted average of the rates on the loans you consolidate. If you qualify for the special consolidation, you most likely want to take advantage of it.