Private Student Loan Consolidation

Posted by Tom Jackson on December 8th, 2017

Private Student Loan Consolidation

The federal government offers only new student loan issuance and does not offer private student loan consolidation or student loan refinancing. Therefore, a student loan borrower who wants to pursue private student loan consolidation works with a private student loan lender to lower student loan rates and monthly payments.

Private student loan consolidation helps a borrower to lower student loan interest payments and monthly payment. Compared with student loan consolidation with the federal government, only private student loan consolidation lowers the interest rate. This is because student loan consolidation with the federal government takes a weighted average of the borrower’s student loan interest rates.

One of the benefits of private student loan consolidation is that the borrower can refinance student loans that are both private and federal. This is different from student loan consolidation with the federal government in which the borrower can only consolidate federal student loans. Therefore, private student loan consolidation has more flexibility than student loan consolidation with the federal government, even if the latter offers forbearance and deferrals.

Student loan refinancing, or private student loan consolidation, enables a student loan borrowers to get a new student loan that is used to repay the previous student loan. The result is a lower student loan payment each month and a lower interest rate. Federal student loan consolidation, by contrast, also provides a new student loan called a Direct Consolidation Loan, but the interest rate and monthly payment are not lower.

Private student loan consolidation, unlike federal student loan consolidation, offers more flexibility when it comes to interest rates. For example, private student loan consolidation offers both fixed and variable interest rates. Fixed rates are a good hedge against rising interest rates because your student loan interest rate will never change, even as interest rates rise.

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Tom Jackson

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Tom Jackson
Joined: July 13th, 2017
Articles Posted: 11

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