Consolidating Private Student Loans

What to Consider When Consolidating Private Student Loans:

Consolidating private student loans is not the same as consolidating federal student loans. Private loans are subject to different lenders and interest rates. Qualifications for consolidating private student loans is also different then consolidating federal loans. As a borrower you must be keenly aware of the differences in order to protect your finances and your credit rating.

The lender is one major difference to consider when consolidating private student loans. You have the right to shop around to a few different education loan institutions. These lenders get to set their own interest rates, so like a traditional loan, shopping around can garner you a better student loan consolidation rate or better terms for repayment. Lenders for consolidating private student loans in the United States are listed here:

• Chase Private Consolidation Loans
• NextStudent Private Consolidation loans
• Student Loan Network Private Loan Consolidation
• Wells Fargo Private Consolidation Loan

These lenders are all specific to educational loans. However, their interest rates are based on traditional loan standards. What this means is that the rate they give you is based on your credit. If you have good credit you will get a better rate, if not your rate will reflect that.  Sometimes this works in your favor. If for example, your credit rate has improved since you took out the loan, due to a better job and improved credit activity the rate may be better then your original loan rate. However, the opposite also holds true for a poor credit history.

When consolidating private student loans you must also be aware that the rate can either be fixed or variable. This is unlike federal student loans which are always fixed for the life of the loan. A fixed rate ensures that your interest will not go up when the market interest rate goes up, but it also keeps it from reducing with the rate of the market. 

In most cases getting a fixed rate is safer for affordability and planning reasons. Only you know which rate you can work with, so be honest with yourself about your financial means when considering student loan consolidation rates. If you can reasonably only pay a set rate on your loan now and don’t foresee that changing in the near future you should try to lock in a fixed rate. Use this as a bargaining tool between lenders if needed. Many lenders are willing to work with you on interest rates and terms in order to have you as their costumer.

One final thing to be aware of when consolidating private student loans is applicable fees. Federal loans do not have any fees associated with consolidation, private loans can and often do. They can range from application fees, to maintenance fees, to early repayment fees. Be sure to check on what kind of fees you will pay and how they effect your overall balance. Are the interest and the fees far greater then the cost of paying the loans separately? Is this cost worth it? If the answer is yes then carefully examine all options and then work towards consolidating your private loans.