Where to Go for Private Student Loan Consolidation
Most students graduate from college or trade school with debt, often a combination of federal and private student loans. When it comes time to begin paying back the debt, loan consolidators can reduce your loans to a single payment---a convenient option---especially if the interest rate is lower than the multiple student loans. Check out Wells Fargo, Chase and the Student Loan Network as options for consolidating your private student loans.
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Considerations
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Has your credit score significantly improved since you applied for the original student loans, or do you have a co-signer with a high credit score? If so, consolidating your private student loans will probably make financial sense, even if you have to pay a processing fee or points. Calculate those costs into your analysis of whether consolidation is in your best interest. Also, since consolidation may lengthen the term of your loan, you may end up paying more interest over the life of the loan than if you had not consolidated. Check out a loan amortization calculator so you can determine if you can live with the additional interest.
Features
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Private student loan consolidation allows you to combine and refinance private loans for education-related expenses. Eligible loan types include private education loans, home equity loans, computer purchase loans or credit card debt, loans from retirement plans, loans used for school travel expenses and loans from insurance policies. The interest rate depends on the prime rate and may go up and down during the life of the loan.
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Wells Fargo
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Using Wells Fargo as your loan consolidator may make financial sense if you are looking to borrow $5,000 to $100,000, with a total limit of $250,000 for all sources of education debt. With lower monthly payments from a consolidated private student loan, you'll be able to free up your cash for other priorities. You may even choose to pay the loan back faster with the extra money since there is no prepayment penalty. The interest rates on these loans range from 1 to 5.75 percent in addition to the prime rate, with a 25-year term. There is a minimum monthly payment on the new loan.
Chase
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If you need to borrow more than $100,000, Chase may be the place to consolidate your private student loans because you can borrow up to $150,000. The minimum amount to borrow is $7,500. Chase offers rates from 5 to 10 percent plus the prime rate for 25-year terms, and no prepayment penalty. You don't have to pay an application or an origination fee.
Student Loan Network
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Student Loan Network also offers private student loan consolidation. The main benefit of consolidation is a longer payment term (for example, 25 years instead of 15), but they do not assume any interest rate difference from your existing loans. Therefore, compare their interest rates with those of other banks. SLN also does not have prepayment penalty.
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