private loan consolidation by localh


									Private Student Loan Consolidation

Many student borrowers who are graduating and thinking about student loan
repayment have questions about “loan consolidation”.

What is loan consolidation?
Loan consolidation simply means borrowing a new loan to pay off one or more
existing loans.

There are two types of student loan consolidation – Federal and Private.

It is important not to confuse the two types. Federal loan consolidation involves
only federal loans (typically Stafford and/or Perkins loans). The low, fixed interest
rate available on federal consolidation loans is not available on private
consolidation loans.

Private consolidation loans, in general, have variable interest rates and some
have fees associated with borrowing. The interest rates, in most cases, are very
similar to the interest rates of the existing private loans being consolidated. In
essence, private consolidation loans replace one private loan with another.

Please note: Private loan consolidation is one method available to help student
borrowers manage their educational loan debt. Private loan consolidation is not
advantageous for every borrower. Make sure you are fully aware of the terms
and any fees associated with a consolidation loan before you apply.

Why then would I choose to consolidate my private education loans?
Simplify: By consolidating, student borrowers who currently have more than
one type of private education loan can combine their existing loans into one new
loan. This eliminates the need to make multiple payments to multiple lenders.

Better Interest Rates: If your credit score has improved significantly since you
borrowed your original private loan(s), you may qualify for a lower interest rate
than what you currently have.

Lower Monthly Payments: Depending on the size of your consolidation loan
you may be able to choose a longer repayment period. Increasing your
repayment period will decrease the amount you pay each month. Of course, this
also increases the total cost of your loan because you are paying interest over a
longer period of time.

You may find additional loan consolidation resources at

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