Use Private Lenders to Consolidate Student Loans
Compare Program Terms and Benefits
It is nearly impossible to complete a college education without creating some level of student debt. Loans, both Federal and private, make it possible for thousands of students every year to achieve their college goals. But all too often those loans become a financial burden to graduating college students, and can leave them in very real economic distress. Following graduation, students often find themselves with better job prospects, but with no immediate increase in income. Fortunately, loan consolidation offers students a practical way to better manage their outstanding college loans.
When students consolidate their outstanding college loans, either their existing lender or a new lender will pay off the balance of all of their students loans and write a fresh loan agreement to cover that total. This new loan agreement helps students to more easily manage their debt by reducing all payments to one more affordable monthly payment. For many students, loan consolidation can mean the difference between totally discharging their college loans and going into default. Defaulting on students loans is never an option, and all students should pursue any alternative that will help them avoid default.
Evaluating Your Outstanding Student Debt
Before considering a consolidated loan, it is important to evaluate your outstanding student debt. This can be done with the help of an accountant, or with a representative from your bank or lending institution. Factors to consider when investigating the advantages of a consolidated loan include:
- Your total monthly loan payments
- The number of remaining payments on all outstanding loans
- Interest rates on each loan
- Number of lenders, both private and public, that have underwritten your loans
- The status of your credit history
Interested students may wish to take our self-assessment quiz to decide if they are likely candidates for loan consolidation prior to contacting a lender.
Consolidating Private Education Loans
Consolidating your student loans begins with contacting a private lender. Banks and private lending institutions that offer student loan packages often also offer loan consolidation programs. Choosing a lender for your consolidated loan may be as easy as contacting your original lender, or you may be better off researching a variety of banks and lending institutions to find the best possible terms and conditions. Researching a consolidation loan requires the same level of attention that was given to all of your original college loans, and you will want to consider interest rates, application and discharge fees, and possible penalties for early repayment. You will also want to consider the life of the loan and all repayment terms before signing any agreement.
When you have found a lender that you are comfortable with, they will pay off all of your outstanding loans, including any penalties and fees for early discharge, and will underwrite your new consolidated loan. The new loan will combine the loan values of all of your existing loans, plus any attendant fees. This new loan will be associated with new interest rates and new terms and conditions. Again, before signing any loan agreement, be certain that you understand all of your responsibilities as a borrower.
How to Apply for Financing
Students applying for a consolidation loan will find that banks and other private lending institutions have made the process relatively easy. Many lenders will allow students to apply online through their dedicated website. The application process should only take a few minutes. Before applying for a consolidated loan, students should gather all pertinent information regarding their outstanding loans and current financial status, including account numbers, monthly income, monthly payment schedules, remaining loan balances, and the names or their primary lenders. The approval period varies according to lending institution, and may take up to two months. Students pursuing a consolidated loan to reduce their monthly payments should understand that until the consolidated loan is signed and completed, they remain responsible for all payments due on their active loans.
When applying for a consolidated loan, the bank will consider the applicant’s monthly income as well as their credit history. Students with little or no credit history, or those with a poor credit report, may find that they will need to apply with a credit-worthy cosigner in order to be approved for a consolidation loan. Typically, cosigners can be relieved of their responsibilities after the primary borrower has made the requisite number of timely payments, thus allowing the primary borrower to build a solid credit history.
Where Have All the Borrower Benefits Gone?
Banks and private lenders that offer college loans often offer student friendly repayment terms. These may include lower interest rates, payment deferrals, and a waiver of application fees. Banks offer these benefits as a way of attracting student borrowers, and ensuring that they are able to fully repay their loans. Consolidated loans rarely offer these types of benefits, and students should not expect their new loan to reflect any of the traditional student benefits.
Students considering loan consolidation should shop carefully for a lender, and thoroughly read all loan agreements before signing any contract. Look for the best possible interest rates and repayment terms, and choose the one that you feel best suits your financial future.
Popular Consolidation Lenders
Private loan consolidation is offered by a variety of banks and lending institutions. Students interested in consolidating their outstanding college loans should begin with their current primary lenders. They are already familiar with both your financial status and your current loan agreements. It may also be advisable to look to other lenders, and to compare what they have to offer in the way of borrower benefits. Carefully consider all of the loan’s terms and conditions, including all applicable fees, repayment options, and interest rates.
The following list comprises some of the most popular, and reputable, private lenders who offer loans for college students at every stage of their career.
Loan consolidation has brought financial relief to thousands of students, and offers a way for borrowers to better manage their college debt. As with any student loan, it is important to do your research. Check with a variety of private lenders, and compare the available loan packages. Consider your current income, and any likely future financial changes. Finally, when considering any loan be certain that you have read and understood all of your responsibilities as a borrower before signing any agreement.