interest rate

What Kind Of Loan Can I Get To Consolidate My Private Student Loans?

I have 0,000 in private student loans from two lenders. The interest rate is over 10%. Is there a way to get another loan to pay this off at a lower interest rate? What kind of debt consolidation program should I consult? Most student loan companies only deal with Federal loans it seems. I keep seeing ads for mortgage loans with low monthly payments– is there something similar I could get for a personal loan?

You’re right, there are a lot more companies that deal in federal student loans than there are companies dealing in private student loans. However, this is changing. As tuition rises and the student loan debt increases, companies have responded to the need for private loan consolidation. Sallie Mae — one of the biggest names in student loans — introduced a private loan consolidation product within the last year. I would encourage you to read up on the various companies that offer private student loan consolidation and pick one that you’re comfortable working with long term. Among the reputable companies I’ve found who offer this service are…

Sallie Mae: http://salliemae.com/after_graduation/manage_your_loans/consolidate_student_loans/private.htm
Key Bank: https://www.key.com/html/H-1.39.b.html
Wells Fargo: https://www.wellsfargo.com/student/repay/private_consolidation/?_requestid=13154
Nelnet: http://www.consolidation.nelnet.net/PvtDescription.asp

You can look into *other* types of loans as well. When home equity loan rates plummeted, a lot of borrowers jumped on that bandwagon and took out a home equity loan which they then used to pay off their student loans. The best part? There is no limit to how much home equity loan interest you can deduct on your taxes, while there is a limit to how much student loan interest you can deduct. If you own a home, you can look into this option. If you don’t own a home yet, you can keep this option in the back of your mind. You can always take out a home equity loan later on and use it to pay off whatever private consolidation loan you decide to obtain today.

Consolidating Student Loans

What is Student Loan Consolidation?

Student loan consolidation is a process where you take your existing student loans and combine them into one single loan, a master loan if you want to call it and in the process significantly reducing your monthly loan payments. There are wide variations on how much you can save by consolidating your loans and is completely dependent on each individual’s situation, students loans, rate of interest of the loans, variable or fixed student loans and so on.

Student Loan Consolidation Types

There are basically two types of student loan consolidation programs. One offered by the government or Federal Student Loan Consolidations program and the other offered by private financial institutions such as banks called as Private Student Loan Consolidation.

Why Consolidate My Student Loans?

Student loan consolidation offers tremendous benefits to a borrower. Imagine by consolidating your loans you can reduce your monthly payments up to 50% in some cases. You have the opportunity to significantly reduce your monthly payment outflow and reduce your overall interest payments on your loan. Apart from reducing your payments, consolidating your loans will also reduce and simplify your payments. Imagine have to deal with one lender rather than a bunch of lenders.

Can I Consolidate Student Loans taken by two different people?

A very common questions asking if one person can combine or consolidate their student loan with their wife or husband. Unfortunately you now can no longer consolidate yours and your spouses student loans anymore. There are many reasons but the main four reasons why it is impractical to for spousal student loan consolidation is Divorce, Death, Disability and Deferment.

Should I and How Do I Consolidate My Student Loans?

A common question that we are often asked is I have several Student Loans out, and I’m supposed to begin repayment soon. I’ve heard that if I consolidate my student loans, it can lower monthly payments, and it puts them at a fixed interest rate. Is this right? How do I go about getting my loans consolidated? Is it hard to qualify for it? Do I have to have full-time employment before I consolidate? Lastly, has anyone ever heard about student loan interest being tax deductible?

Let’s start with the easy ones, first

Student loan interest IS tax-deductible. The maximum amount you can claim each year is $2500. If you paid more than that, you can not deduct anything over $2500.

(Can I assume that your starting salary won’t be in excess of $55,000? If you do make more than $55,000, you won’t be able to take the full deduction for student loan interest.)

Do you have to be employed full-time in order to consolidate? No you dont.

Should you consolidate your students loans? Ah, now that’s the tough one. Here’s what the Department of Education has to say about consolidation loans:

“Always Consider the Cost”. You should keep in mind that although consolidation can simplify loan repayment and lower your monthly payment, it also can significantly increase the total cost of repaying your loans. Consolidation offers lower monthly payments by giving borrowers up to 30 years to repay their loans. So, you’ll make more payments and pay more in interest. In fact, in some situations consolidation can double your total interest expense. If you don’t need monthly payment relief, you should compare the cost of repaying your unconsolidated loans against the cost of repaying a consolidation loan. You also should take into account the impact of losing any borrower benefits offered under non-consolidated repayment plans. Borrower benefits, which may include interest rate discounts, principal rebates, or some loan cancellation benefits can significantly reduce the cost of repaying your loans.

Once made, Federal Consolidation Loans cannot be unmade. That’s because the loans that were consolidated have been paid off and no longer exist. Take the time to study your consolidation options before you submit your application. This checklist has been designed to help you determine whether and how you should consolidate your loans.”

I hope that helped, good luck!