Private Student Loan Consolidation
Student Loan Consolidation with Private Student Loan Refinancing
A private refinance loan can combine existing federal student loans and/or private student loans into a new, single loan. Offered by banks, credit unions, and other financial institutions, a private refinance loan can reduce the pressure on your budget, making it easier to manage your education debt.
Benefits of Private Student Loan Refinancing
- Cut the monthly payments on your student loans
- 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 refinance loan without a cosigner
- Pay off loans early with no prepayment penalties
Before you decide to refinance your federal student loans into a private refinance loan, be sure to consider this drawback: You may be giving up some federal student loan benefits that are important to you.
Monthly Payment Relief
One of the key benefits of refinancing your private student loans is payment relief. When you combine all of your student or parent loans into one refinance loan, your lender may extend your repayment term, which usually reduces your monthly 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 refinance loan faster and save money on interest.
Impact of Extended Repayment Term
This table shows the monthly payment reduction resulting from refinancing federal and/or private student loans into a 5% fixed rate private refinance loan.
|Loan Amount||Monthly Payment Before Refinancing||Monthly Payment After Refinancing
|Monthly Payment Reduction||Increase in Total Payments|
Impact of Lower Interest Rate
This table shows the monthly payment reduction resulting from refinancing a 6.84% Federal Parent PLUS loan into a 5% fixed-rate private refinance loan.
|Loan Amount||Monthly Payment Before Refinancing (Parent PLUS Loan, 6.84%, 10-Year term)||Monthly Payment After Refinancing
(Private Refinance Loan, 5%, 10-Year Term))
|Monthly Payment Reduction||Amount You Save Over the Life of the Loan|
To learn more about private refinance loans, review answers to frequently asked questions about private student loan refinancing.
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