Private Student Loans Consolidation

6 min read

As we have seen in the past few years, private student loans have been proliferating. In fact, according to financial institution Fiserv’s 2017 U.S. Lending Survey, a record number of Americans now hold student loan debt. Between 2012 and 2016, the total outstanding balance of private student loans increased from $824 billion to $967 billion, an increase of 28 percent. If you take out a private student loan to pay for school, you may want to consider consolidating your loans to ease the burden. Here are some pros and cons of private student loans consolidation.

Pros

Lower interest rates

The average rate on federal student loans dropped from 8.41 percent in July 2015 to 6.31 percent in January 2018. That’s still high compared to what many borrowers paid before the 2008 recession. But if you consolidate private student loans, you’ll likely get a lower rate than if you took on individual loans. Plus, if you choose to refinance your loans rather than repay them in full when they’re due, you might save money over time.

Avoiding fees

If you don’t consolidate your loans, you could end up paying some hefty fees. According to NerdWallet, you could lose around 10 percent of your monthly payment (depending on how much you borrow) while you’re in repayment. By consolidating your private student loans, you can avoid these extra costs.

Cons

Closing your old account

When you close your original private student loan accounts, you will no longer be able to access those funds. You won’t be able to use those funds to make future payments, either. And closing your account will trigger a default on any remaining balances. So if you have a lot of private student loans and don’t plan to refinance, you should probably keep your existing accounts open.

Changing the terms of your loan

Some private lenders offer flexible repayment options, but others charge higher interest rates and impose stricter rules for repaying your loans. When you consolidate your loans, you’ll need to find a lender who offers similar benefits. Even if you do, it’s possible that your lender will change the terms of your current agreement, so check with them first.

Loss of privacy

If you’ve consolidated your loans, you’ll have a single account instead of several. Your credit report and score will be impacted by that. And if you’re worried about identity theft, you should know that the Consumer Financial Protection Bureau says lenders can share financial information without your consent. After you consolidate, your private student loans will become public records, even if you haven’t declared bankruptcy.

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Private Student Loans Consolidation

What is Private Student Loan Consolidation?

A private student loan consolidation is a service offered to borrowers who have several different loans with each lender. This service combines those debts into one payment plan and then makes monthly payments to just one creditor instead of making separate payments to each individual lender.

Reasons Why You Might Consider a Private Student Loan Consolidation

There are many reasons that people choose to consolidate their school debt. Among them are convenience, flexibility, and budgeting. While some banks offer student loan consolidation, they generally don’t provide the same level of customer service that is associated with privately held companies. In addition, these smaller lenders often work exclusively with students, providing no services to graduates. That means that you may not find a good deal if you go directly to a bank. However, a company like Higher One works closely with schools and businesses that are trying to help their students repay their debts and make the best use of their education.

Benefits of Private Student Loan Consolidation.

When you take out a personal loan, your interest rate is likely higher than when you took out your federal loan. If you were able to get a lower rate when you first borrowed, you would save money over time. That savings could mean extra cash to pay off another bill, invest, or even contribute to retirement. Another benefit is that consolidating your student loans can extend the length of time until you pay off your entire balance.

How Does Private Student Loan Consolidation Work?

This type of loan consolidation involves three major steps. First, you need to contact a provider to determine how much money you owe on your loans. Then, you should decide whether to take out a private student loan, which you would then combine with your existing loans. Finally, your new payment amount would be determined based on your income and other factors. Once you complete these steps, your new payment schedule would be set up and sent to you electronically via email.

Are There Any Downsides to Private Student Loan Consolidation Services?

Of course, there are always risks involved with any financial decision. Because private student loan consolidation relies on your credit score, any negative mark on your report will affect your eligibility for consolidation. On average, your credit score drops about 20 points after taking out a student loan. If you already have a low score, your chances of receiving consolidation are decreased. In addition, you might face additional fees and charges if you sign up for an auto-debit feature.

Private Student Loans Consolidation

Description: Private student loans consolidation is the best way to consolidate private student loan debt if you have several private student loans. You will get a lower interest rate and save money over time. If you want to take advantage of this program you need to contact a company called Student Loan Xpress right away. I just received my first offer today and was able to save $400 per month!

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Private Student Loans Consolidation

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Private Student Loans Consolidation

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