Confused about interest rates for Consolidating SLs

[Anonymous]

I currently have 3 loans all with Direct Loan. As of 2/09 

1. Undergraduate  $67,647.46 @ 8.250% fixed        30 year graduated payment plan

2. Graduate             $4,963.48 @ 4.210% variable   10 year graduated payment plan

3. Graduate           $16,188.66 @ 6.800% fixed         same as above

When I asked DL about consolidating all three loans, I was informed that they add all the interest rates and divide coming up with a fixed rate of 7.250%  Is this really a better deal?

I keep hearing about how interest rates for student loans are dropping. Does this only apply to new borrowers?  Anyone have any suggestions on how I can get out from under this?

DL takes a single payment to cover all three loans.  I'm currently on a reduced payment forebearance (no other choice) and I have no delinquent payments. Dealing with the  Dept of Ed has not been a problem at all. They have been kind and accommodating every time I speak with someone. Unfortunately they can not give advice, only offer options. 

Without going into details & questions that belong on other boards - my FICO is in the FAIR range and with this "good debt" around my neck, should I even bother to try and improve anything?

THANK YOU for your response

[Anonymous]

Consolidation loans are a weighted average of the amounts owed  and interest rates. Your problem is  that 84,000 of your loan debt is at a very high fixed rate. Since they are fixed, changes in the interest rates are not going to help you b/c they are fixed rate loans. The 4,000+ you owe on the variable rate will drop with the reset in July. What people don't tell you is that getting a high interest rate fixed loan screws you in future consolidations. Avoid fixed rate loans unless the rate is below 5% IMO

Whether a combined 7.25% will save you money you will have to look at the total payment over lifetime, which they give you if you use the calculator on the Dept Ed website. Compare that to the total lifetime payments by logging into your account.  

[Anonymous]

I consolidated the 2 parent plus loans I had so that it would be easier to make 1 payment and I could get it over 25 years instead of 10 years.  It saved me 250.00 a month and that was my concern at the time.  Now of course I realized that I did wrong because with Sallie Mae I was paying 7.5 and 7.8% interest and with the Department of Education I am paying 8.25% but I felt it was financially better for me and I can pay it off early and avoid all that interest.  I just did not want to get to the point that I could not make the payments and 300.00 a month is much better then 500.00.  I realize I should of waited but I did not so there is nothing I can do about it.  I just think that sometimes you have to do what is better for your financially even if it costs you a little more.