Consolidating Private Student Loans

Published on Jun 1, 2016

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Consolidating Private Student Loans

What is a Consolidation Loan?

A consolidation loan is a type of student loan where your payments are consolidated into one monthly payment. You may think that consolidating private student loans means saving money, however, the opposite is true. A consolidation loan allows lenders to combine several different loans – each with their own interest rate and repayment term – into one single loan with a lower APR (interest rate). In return, borrowers have a longer period of time to pay back the amount borrowed. If you’re looking to consolidate college debt, we recommend comparing rates at LendUp.com today!

Do I Need a Conslidation Loan?

If you’ve been paying off your loans for three years or more without taking any breaks, then you probably don’t need to take out a consolidation loan. However, if you have recently graduated and/or started working full-time, then you may want to consider consolidating your private student loans right away. By doing so, you’ll save money on interest charges and increase your chances of remaining current on your loans.

How Much Can I Expect to Pay?

Each lender offers variable and fixed interest rates, so the amount of money you borrow could range anywhere from $100-$10,000. Most students receive a percentage of their total loans (up to 80%) while they are enrolled in school, not to exceed 10%, but this varies. If you decide to get a consolidation loan, it is important to look at how much you will owe over time compared to what you currently owe. Your effective interest rate will depend on whether you choose a fixed or variable rate.

Which Type of Loan Should I Choose?

The best way to determine which type of loan is the best option for you is to calculate your expected income after graduating and compare it to the expected balance due on your loans. If your projected earnings are greater than your outstanding balances, then a fixed rate is ideal. Otherwise, use a variable rate to ensure that you avoid higher interest costs.

How Long Will My Payment Be?

Your payment will vary based on the company offering the loan, how long your repayment terms are, and your credit score. Typically, the longer your repayment term, the less you will pay per month. A great way to save money is to take advantage of a zero percent introductory interest rate. After six months, you will either switch to a standard interest rate or rollover your loan into a new one.

Consolidating Private Student Loans

You need to Consolidate Your Student Loan Debt

If you have private student loan debt, chances are it’s not going away any time soon; you need to consolidate your private student loans. If you don’t consolidate them now, you could lose money by paying high interest rates over the long term. While consolidating your student loans may seem like a hassle, it’s actually a pretty simple procedure. Read on to learn how to do it!

Make Sure That You Can Afford To Consolidate Your Student Loans

Now let’s talk about what you should consider before deciding whether or not you want to consolidate your student loan debt. One of the first questions you need to ask yourself is, “can I afford to pay off my student loans?” You should know right away if you can’t, because if you’re unable to make payments, then you’ll never get out of debt. On the other hand, if you can afford to make payments each month, then you’re ready to start consolidating your student loan debt!

How Much Will My Interest Rate Go Up By Consolidating Student Loans?

When you consolidate your student loans, your interest rate will go down. Before you decide to take out private student loans, make sure that you factor in the potential increase in interest rates after you consolidate. Keep in mind that you won’t necessarily save money by doing this, depending on your current interest rate and the length of repayment period. So use our calculator to estimate how much you’d save by refinancing your student loans.

Once you figure out how much you would save by taking out a lower-interest loan, you might think that it makes sense to take out the original loans instead of refinance. But keep in mind that if you choose not to consolidate your student loans, you’ll end up paying higher monthly payments — and that means you’ll owe more money overall.

What Are The Benefits Of Consolidating My Student Loans?

The best way to answer that question is to tell you the three biggest advantages of consolidating your student loans:

Lower Monthly Payments – Consistent monthly payments are a huge benefit. Once you pay for your student loans, you can rest assured knowing that your payments won’t change until they’re paid off. Plus, because consolidation lowers your total amount of debt, it makes it easier to handle your monthly payments without worrying about making ends meet.

Save Money Over Time – You might think that consolidating your student loans will only help you financially now, but it will actually save you money in the future. Think about it: If you make consistent payments each month, you’ll be able to reduce the amount owed over time. And when you finally pay off your student loans, you won’t have to worry about those pesky payments anymore!

Reduce Credit Score Downgrade Risk – When you consolidate your student loans instead of paying them back, you’ll avoid having your credit score downgraded. This could result in less favorable terms for your future auto and home purchases. By consolidating your student loans, you give lenders the impression that you’ve taken control of your financial situation and are planning to repay your debts.

Whether you’re looking to consolidate your student loans now or are thinking about doing it at some point in the future, remember these four things.

First, you should know that you can always refinance your student loans if you find yourself in a tight spot later on down the road. Second, make sure that you can afford to consolidate your student loans before you even start the process. Third, understand your options before choosing to consolidate your student loans. Finally, try to stick to two to three consolidating companies per year so you’re not tempted to switch around too often.

Consolidating Private Student Loans

In December 2014, the Obama administration announced plans to reform the way federal student loans work. As we know from the last recession, private student loans have been a major contributor to increasing rates of default, foreclosures, and bankruptcies among students. The government’s plan would consolidate student debt for borrowers at all levels, and offer them flexible repayment options based on their income. But what if you don’t qualify? You may still get approved for a loan — even though its terms are much more rigid than those offered under the old system. Here’s how that happens.

First, let’s take a look at who qualifies for consolidation. Under the current program, you need to have borrowed $10,000 or less in federal education loans over the past six years to qualify. Even if you have taken out several different types of loans (such as PLUS loans, Perkins loans, and Stafford loans), each of those loans counts towards the total amount borrowed. If you have any college-related bills outstanding — including tuition, room and board, books, supplies, and fees — they count toward the total amount owed, too. A single bill might make you ineligible, while bills spread out over time could help you qualify. (For example, if you took out five separate loans between 2012 and 2018, you would only owe $10,000.)

The Department of Education does not allow institutions or lenders to collect information about your specific financial situation, so there’s no guarantee you won’t get denied. However, it is wise to prepare yourself by doing some research ahead of time — particularly before applying to schools. That way, you can make sure your finances are stable enough to handle payments. Remember: Consolidation doesn’t mean you’ll pay off your debts faster, or that it will reduce the interest rate. On the contrary, you’ll probably end up paying higher monthly payments. (And if your lender agrees to lower the interest rate, you’d likely be on the hook for the difference.)

If you do qualify, here’s what to expect. First, you’ll likely receive a letter informing you that you qualify for consolidation. Then, you’ll apply online to obtain a “pqualification” estimate. After a short period of time, you should receive a decision telling you whether or not you were accepted. If you are approved, the lender will send you a “Notice of Acceptance” along with the final agreement, once it’s signed.

When you sign the agreement, you commit to making 36 equal payments per year. These payments are due on the same day each month, beginning September 1st, 2017 and ending August 1st, 2023. Because your loan is consolidated, you will be responsible for repaying only two types of payments: the original principal balance plus accrued interest on the entire loan; and a portion of the variable interest rate charged on your loan. Your loan payment amount will remain the same throughout the term of the loan.

While consolidation offers many advantages, there are two drawbacks: One, it requires you to repay the full amount of your loan immediately, regardless of your ability to pay. And two, you cannot refinance your loan until after July 22nd, 2019. So don’t wait! Talk to your bank representative today about consolidating your student loans.

Consolidating Private Student Loans

How do I consolidate private student loans?

Private student loans have become increasingly popular among students looking to finance their education. However, they’re not always easy to get approved for, let alone manageable once you’ve been accepted. Fortunately, there are things you can do to make them a little bit easier to manage. Here’s what you need to know about consolidating private student loans:

What is consolidation?

It involves rolling all of your outstanding amounts into one monthly payment. You’ll actually end up paying less total money over time than if you had paid off your loans separately. It gives you more control over your finances.

Are private student loan companies reliable?

Unfortunately, many private student loan lenders aren’t always reliable. That being said, the following tips can help you find the best place to go.

Check Your Credit Report

The first step is to make sure you have a good credit rating before attempting to apply for a loan. While this may seem obvious, a lot of people fall victim to scams and fraudsters who try to take advantage of low credit scores. If you haven’t yet checked your credit report recently, you should definitely do so.

Look Up Reviews Online

Another way to find out whether or not a lender is reputable is to look at online reviews. Review sites like Yelp and Google provide objective information about businesses, including financial institutions. Also, check consumer protection groups to see if any complaints have been filed against the company.

Don’t Fall Victim To A Scammer

You can also avoid falling prey to loan scammers by doing some research beforehand. Make sure that the lender isn’t offering loans that don’t comply with state regulations. You should never have to pay anything upfront to qualify for a loan. And when you receive your offer, read it carefully and ask questions if necessary.

Do a Little Research On Yourself

This probably goes without saying, but you shouldn’t just go around blindly taking out loans. Before applying for a loan, you should make sure you’re financially stable enough to handle financial obligations. If you’re not, then you might want to reconsider getting a private student loan.

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