Consolidating Private Student Loans
Are you looking for inforamtion on consolidating private student loans, well you are in the right places as we will show you both the advantages and disadvantages of this process. Lets face it, pretty much everyone that goes to college has to take out more than just one loan to have enough to pay their tuition, some three or four or more. Consolidating private student loans can be an excellent way to save you both time and money, among many other things, but is it for you? The next section will provide and overview of the process as well as go into detail about both sides to consolidating private student loans, so you can decide for yourself.
Overview Of Consolidating Private Student Loans
If you aren’t familiar with the process of consolidating private student loans, it is essentially where all of your loans are combined into one lump sum where you just pay one loan payment per month. You can do this through many consolidation companies out there who will take care of all the major details, like paying off your loan lenders so that they can now be your sole loan lender, so where all you have to worry about is getting your payment in on time.
Pros & Cons of Consolidating Private Student Loans
First we will start with the benefits that are provided to one who is thinking about consolidating private student loans:
- Consolidation companies reset all of the financial payment information once they obtain your loans, like monthly payment as well as interest rate. By searching for a consolidation company that does private student loans, you can get one who requires both lower monthly payments as well as lower interest rates compared to what you were paying to your previous lenders. A lower credit score can be attained if your credit has improved from when you first took out your loans, as a credit check will be run, and is one of the main factors in your eligibility.
- Another great benefit to consolidating private student loans as that most all consolidation companies have very flexible repayment options, meaning that you can pay your student loan off a lot faster by upping the monthly payment, as well as save in the interest you would have paid if you just paid the minimum.
- You only have to focus on making one payment instead of multiple as well as only have to call one resource for any questions related to your repayment programs.
Here are some of the drawbacks of consolidating private student loans:
- The first disadvantage to consolidating private student loans is the oriantation fee, also known as the activation fee, which is what you pay when you first establish an account with a consolidation company, can be very high in many cases. For example, say that you will have a 50,000 dollar sum in which you consolidate, and the activation fee is 4 percent, that equates to an extra 2000 dollars you have to pay.
- Second, if by chance your credit schore is down in the dumps, consolidating your private student loans can result in you paying a lot more when it comes to interest. Like is was said above, the interest rate that you will pay is heavily based on your credit score, and it will be much higher if you have a negative credit history.
- Consolidating private student loans can also result in you not being able to qualify for certain forgiveness programs, which are programs in which a big part of your debt can be wiped away.
- Like it was said above, the repayment methods are flexible which lead many to choosing a longer period in which they want to pay off their debt. This will result in you paying a lot more on your loan and interest.
Consolidating Private Student Loans – Conclusion
Now that you know what the benefits and disadvantages are of consolidating private student loans, it should be easier to make your descision whether you want to go for it or not. It can be a great benefit to some, but can really be an even bigger burden to others. The best thing to do now if you are still contemplating whether or not to consolidate your private student loans is to do your homework by taking the pros if they are relevant to your situation, as well as weighing the cons to see if benefits outweigh them. The other thing you can do when thinking about consolidating private student loans is to shop around with different companies, and view what their guidelines are.