Private Student Loan Consolidation – A Great Option for Some!

If you are struggling to pay multiple student loans, you are not alone! Therefore, the option to consolidate student loans is one of the more important decisions you will make regarding your student loan debt. Which type of consolidation to make, federal or private, is just as important. However, in many cases you may not qualify for federal student loan consolidation or you may find, after exploring both options, that private student loan consolidation is the best choice for you.

Federal loans are not credit based, meaning you could have poor credit and still qualify in order to consolidate your student loans. Private student loans are based on your credit, often require a co-signer, and are not based on your needs. Both types of student loan consolidation will combine your multiple student loans into one, with a lower payment and usually a lower interest rate.

While some private loans do not provide as many benefits as federal loans, often a federal student loan consolidation is just not possible. For instance, if you are already taking the maximum amount allowed from a federal loan, then private student loan consolidation may be the best option for you. They are easier to obtain, particularly if you have a co-signer. Actually, private student loans vary with the shifting market trends, thus your rates can be fixed or variable, depending upon the terms of your loan, giving you more interest rate options. Private credit-based loans also offer competitive interest rates and repayment terms and most private lenders do not have prepayment penalties.

Another reason for consolidating student loan debt with a private lender is your credit score. If you have a very good credit score or you have a co-signer, such as a parent, with an excellent credit rating, you could qualify for a significantly lower interest rate. Over the time of a repaying a 20-30 year consolidated student loan, this lower interest rate could amount to significant savings.

Despite all the reasons to consider a private loan, private student loan consolidation may be the best option for one main factor; if you hold private loans, federal loan lenders typically charge higher interest rates to consolidate non-federal loans. Private lenders accept consolidation of federal student loans and often there are no penalty fees for doing so. Thus, private student loan consolidation could significantly reduce your monthly payment burden.

Private Student Loan Consolidation – What You Need To Know

Millions of students take out private student loans for their education. Private students loans have extremely high interest rates that can leave many students paying thousands of dollars in interest. Thankfully, there are a number of options available for private student loan consolidation.

Any borrower who had a poor credit rating when they originally sought their student loan should consider consolidation. When your credit rating improves, you may be able to qualify for a lower interest rate. Having a low interest rate will enable you to save thousands of dollars in interest on your student loans. Borrowers who have multiple loans with multiple lenders should strongly consider consolidating their current loans. Consolidating your loans under one provider will enable you to see significant cost savings if you have an acceptable credit score.

There are a number of lenders that consumers can choose from in order to consolidate their student loans. Many lenders have a minimum and maximum amount of student loans that they are willing to consolidate. Wells Fargo offers borrowers the ability to reduce their interest rate by setting up an automatic debit as well as maintaining other financial products with the company. The lowest interest rate that Wells Fargo offers is 3.25% floor variable rate. The Student Loan Network offers private loan consolidation services as well. The minimum amount of loans that they are willing to finance is $10,000 with a maximum amount of $300,000. Interest rates are variable with the interest rate being calculated with three month LIBOR + 5% or three month LIBOR + 8.5%. Any cosigner can be released after 48 consecutive months of payments.

Many borrowers who are unwilling to consolidate their student loans with another provider can consolidate their student loans under a fixed rate home equity loan. Student loan borrowers are able to obtain a fixed rate home equity loan for record low interest rates. Borrowers will then repay their student loan payments under the home equity loan. Some borrowers prefer to have their students loans consolidated in a home equity loan as it is able to be discharged in bankruptcy unlike a student loan.

Private student loan consolidation is not right for everyone. Individuals need to look at their specific financial situation to determine whether student loan consolidation is right for their needs. There are excellent opportunities to save thousands of dollars of interest as well as reduce potential liability for private student loan borrowers.