This article is about how private student loans can be consolidated. Consolidation, or refinancing, of private student loans means replacing several student loans with a single new, private loan; private, federal or a combination of the two. If your new loan has a lower interest rate, you’ll save money.
When you refinance, your financial history, including your credit score, earnings, work history and educational record, will determine your new interest rate. Usually at least in the high 600s, this is a required credit score to apply, and rates vary from about 2% to more than 9%.
How to Consolidate Private Student Loans – Refinancing
First of all, you will have to use a Loan calculator to check if there is any need to consolidate your loans. Since this is private student loans consolidation, it is more strict compared to that of federal. Some private loan companies don’t offer this option in their loan agreement at all. For more on private student loans companies and what they offer international students, please read the article below.
Requirements for Refinancing
- you must have made at least a few on-time student loan payments after leaving school.
- Good or excellent credit, generally defined as credit scores of 690 or higher.
- Have a stable job.
- Access to a co-signer with those characteristics, if that doesn’t sound like you.
Note; Refinancing federal student loans into a private loan implies sacrificing federal loan-specific consumer protections. These include the option of tying payments to income and loan repayment opportunities.
Private corporations offer, like the federal government, the option of consolidating several student loans into one. But they will consolidate both public and private loans, unlike the federal government.
The goal of this method is not only to make a single payment simpler, but also to get a lower interest rate based on your financial background.
To compare monthly contributions in three different conditions, use a consolidation calculator: federal student loan consolidation, refinancing of private student loans and income-driven repayment plans.