Private Education Loan Consolidation

Private education loan consolidation helps you manage your finances while ensuring your education continues without a hiccup. It is a fact that government aid and personal resources are just not enough to get a quality education these days. Hence, you do not have a choice, but to take private education loans to supplement the money you’ve already gathered.

Private loans, though convenient, come with high interest rates (as compared to government education loans), which tends to pile up while you’re still studying. Also, lenders have maximum loan ceilings beyond which they won’t fund you and you may need to take more than one private loan. Consolidating all these private education loans into one is preferable not only because of the simplicity, but also because it makes for fiscal prudence.

However, you cannot club private education loans with other state/federal loans you currently have for a simple reason – interest rates on the latter are much lower and no private lender would be willing to provide loans at similar interest rates. What is then a viable solution? Consolidate all private education loans into one single loan. Discussed here is the process and requirements for the same.

Benefits of Loan Consolidation

  • One single payment instead of multiple monthly repayments.
  • Recalibration of the total loan term, giving you more time to repay.
  • A lower interest rate against the earlier contracted interest rates.

The Consolidation Process

First, approach the existing lender(s) and check if they’re willing to take on a consolidated debt, including loans provided by other competing lenders (since this is new business for the lender, you will find most of them receptive to the idea). Second, negotiate to get the best possible interest rate and loan term. This becomes easier if your credit score has improved from the time you signed up for the original loans.

Check with all the lenders about any fees which they charge for early prepayment, loan closure or consolidation. You must weigh these extraneous costs against the possible benefits you will be getting with consolidating your loans. If you have access to home equity, a cheaper alternative would be to take one fixed rate home equity loan and transfer all your existing private loan debts to this one. Simultaneously, work on consolidating your federal/state provided loans to end up with two loans only – one private education loan and one government-aid loan.

Private Lenders Providing Loan Consolidation Services

As a student, chances are that your existing private education loans may have been provided by the following lenders, who also allow loan consolidation. Most of the private lenders do it. However, they have some eligibility criteria which include minimum age requirement (in most of the cases it’s 21), repayment status at the time of getting application for private education loan consolidation and a good credit. Some private lenders also help you enjoying the Federal Government tax benefits with the provision of Tax payer relief Act and other taxpaying norms.

With the information above, go ahead, consolidate your private education loans, secure peace of mind and concentrate on your studies.


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