For recent graduates of college, conducting a review of your student loan debt may be a good thing to consider. For those of you who have taken out private student loans to fund your college education, consolidating your private student loans may be an option for you, if you are unsatisfied with your current loans or are struggling with your monthly student loan payments. Before borrowers consider consolidating their private student loans, they should make certain this is the best option for them by learning more about private student loan consolidation. There are a few basic things you should look for, and know when consolidating private student loans.
1. You should not consolidate your federal student loans together with your private education loans. If you have both private student loans and federal student loans, consolidate them separately. Federal consolidation loans often offer much better benefits and lower interest rates to that of which a private lender can offer you.
2. When talking to private loan companies, ask whether the interest rate is fixed or variable, are any fees associated with the consolidation loan, and if there are any prepayment penalties. These are all important things to know when it comes to consolidating private student loans.
3. Interest rates on private student loans are based on your credit score, so you may be able to get a lower interest rate through a private consolidation loan if your credit score has significantly improved since when you first obtained the loans. In addition, certain borrowers who apply for a private student loan consolidation with a cosigner who has an excellent credit profile may be eligible to receive a lower interest rate on their consolidation loan than they have on their current private student loans.
4. Many people assume that they must consolidate their private student loans with another company to get better interest rates, this is not always the case. Try contacting your current lender to see if they can reduce your student loan interest rates, or offer you a good deal on a private consolidation loan. Some student loan lenders may be willing to work with you, instead of losing the student loans to another lender.
5. A private student loan consolidation, may offer borrowers a reduction in their monthly student loan payment by extending the repayment term (or the lifetime) of the private student loans being consolidated. However, since a private student loan consolidation will likely have a longer repayment term than your current private student loans, you could be paying more in interest over the lifetime of the loan if you consolidate.