Use Private Lenders to Consolidate Student Loans
Compare Program Terms and Benefits
Consolidating your private student loans is a whole separate process from federal consolidation. If you are bogged down with multiple private student loans, if you’ve already applied for loan deferment or forbearance you may consider a student consolidation loan to be a practical financial decision.
When you opt to consolidate, typically you’ve already weighed the pros and cons. Factors to consider include:
- Total monthly loan payments per month.
- Interest rates
- Number of payments remaining
- Credit history
Evaluate your financial situation and you will make an informed decision, but it should be in concert with an account manager through a reputable lender. Right now take our simple self-assessment quiz and decide for yourself if you’d be a likely candidate for a private student consolidation loan.
Consolidating Private Education Loans
Private student loan lenders like Sallie Mae, Nellie Mae, Bank of America, and Citibank all feature their own brands of specially marketed student loans. No doubt they also extend equally branded private consolidation loans.
If you have multiple private student loans you may apply for a consolidation loan. Your consolidation lender pays off your multiple loans and a new single loan is issued to you that combines the loan values of all your loans. This new loan now is associated with a new interest rate, new loan repayment term, new life of loan, new loan limit, and new lower monthly payment.
How to Apply for Financing
When you apply for a private consolidation loan you are likely to find a convenient online applicataion. As simplistic as this seems you’ll still be required to provide all kinds of information associated with your current loan and financial state. Make sure you have loan account numbers, pay-off figures, due dates, names of lenders, and balances owed.
Credit history matters when it comes to private consolidation. These are not federally guaranteed student loans. If you are trying to apply for a private consolidation loan with bad credit, here’s your best strategy: apply with a credit-worthy co-signor, a trusted friend or family member.
The approval period could be up to two months. You are not excused from loan repayment during this time.
Where Have All the Borrower Benefits Gone?
Private student loan lenders used to really flex their competitive muscle when it came to private student loans. They’d stack up interest rate discounts and cut fees for good customers. But with the College Cost Reduction Act of 2007 private lenders’ subsidies were deeply cut. Consequently lenders have cut many of the borrower perks that formerly would have been passed onto you.
Your best strategy: shop very carefully for private consolidation products. Lenders may have limited repayment terms, ramped up minimum loan limits, and eliminated all interest rate deductions.
Popular Consolidation Lenders
Today’s college grad is fortunate to have the convenience of online account management capabilities through most lenders. This dexterity allows you instant, up to the minute information and access to your student loans. You may change information, make payments, and even apply to postpone a payment. Tools like these give you the financial muscle to adjust account preferences and make important and timely decisions that affect the rest of your financial life.
There are many more options for private loan consolidation, including those available through your student loan provider. In some cases the biggest differences between lenders lies in the borrower benefits and loan terms, such as fees, repayment options, types of loans accepted and interest rate reductions for good practices. Shop carefully.