Private Student Loan Consolidation
A private consolidation loan combines several existing private student loans into a new, single loan. Offered by banks, credit unions and other financial institutions, a private consolidation loan can reduce the pressure on your budget, making it easier to manage your education debt.
Benefits of Private Student Loan Consolidation
- Cut your monthly student loan payments
- Streamline repayment by replacing multiple loans with a single loan
- Qualify for a lower interest rate if credit score has improved
- Release the cosigner from current loans by qualifying for a consolidation loan without a cosigner
- Pay off loans early with no prepayment penalties
Monthly Payment Relief
One of the key benefits of consolidating your private student loans is payment relief. When you combine all of your private loans into one consolidation loan, your lender may extend your repayment term, which usually reduces your payment. (Note that increasing the repayment term may increase the total interest paid over the life of the loan.)
With a lower monthly payment, you’ll have more money available to cover living expenses and pay off higher interest rate debt. When it becomes more affordable, you can make larger payments to pay off your consolidation loan faster and save money on interest.
This table shows the potential reduction in the monthly loan payment and increase in total payments with a 6.8% fixed-rate private consolidation loan.
|Loan Amount||Monthly Payment Before Consolidation
|Monthly Payment After Consolidation
|Decrease in Monthly Payment||Increase in Total Payments|
To learn more about private consolidation loans, review answers to frequently asked questions about private student loan consolidation.