Private Student Loan Consolidation Guide

Earning a college degree is an accomplishment of which to be proud. Once you leave the university scene and head out into the working world, the responsibilities of paying off your student loans begin. Many factors contribute toward the ability to pay student loans according to the terms agreed upon when the loan was taken. If financial difficulty translates into your ability to pay off student loans, it's better to look into student loan consolidation than pay late, or miss payments altogether.

There are two types of student loans. Federal direct loans are provided by the government and offer lower interest rates and flexible repayment plans. Private student loans are loans secured through your bank or credit union. These loans are treated much in the same way as any other loan and tend to have stricter repayment plans and interest that's dependent upon the current market.

Federal and private loans cannot be consolidated into the same consolidated repayment plan. While they both help you pay the costs of furthering your education, federal and private student loans are created through two separate entities and involve different terms. A federal student loan is backed by the government. Should you be unable to repay your loan, the government pays the bank, then looks to you to repay them. Because the bank is guaranteed to get their money back, they can offer you, the borrower, a lower interest rate. In the case of private student loans, the loan is given to you directly from the bank and is dependent upon your creditworthiness. Your federal student loans are considered to be lower risk and, therefore, cannot be combined with higher risk private loans.

Since banking institutions and student loan organizations such as Chase Bank, CitiBank, and Sallie Mae no longer provide private student loan consolidations, you can find yourself facing quite a dilemma if financial circumstances require you to seek private student loan consolidation. To help meet the demands of students seeking to obtain a private student loan or consolidate existing private loans, Credit Union Student Loans was created to fill that need.

Credit Union Student Loans (cuStudentLoans.org) provides college students with a low-cost private loan alternative. During college class attendance, you can opt to make interest-only payments or monthly $25 Proactive Payments. Once you've earned your degree and are ready to enter the working world, your payments can be deferred until you've been out of school for six months. Once you've graduated, should you find yourself needing to consolidate any existent private student loans, doing so through Credit Union Student Loans works in your favor by setting you up for greater repayment success.

Because Credit Union Student Loans recognizes the burden of private loan repayment, they work with you to make repayment possible in a manner that allows you to meet all of your financial obligations, not just your loan consolidation payments. Since all your private loans are consolidated into one repayment program, you need only make one monthly payment. Lower payments can be obtained, with a competitive interest rate and repayment options that include a 15-year repayment plan.

If your parents or someone else has to cosign for your private loan consolidation, you can have them released from the loan after making on-time payments for 12 consecutive months. Whether you're seeking a private loan consolidation on your undergraduate loans up to $100,000 or graduate degree loans up to $150,000, Credit Union Student Loans works with you to help you find the best consolidation plan and provides you with the lowest rates for which you qualify.

Choosing to consolidate your private student loans is a big decision. Working with an organization that provides a variety of services to meet your individual needs can give you the security and confidence to make that decision.

Consolidating Private Student Loans can be Quick and Easy but it needs to be examined before making the decision if it's right for you.

We'll start with a basic definition for those who have never looked into loan consolidation before: Loan consolidation is a method through which multiple debts can be turned into a single, more easily manageable debt. This is done through the simple act of a consolidator buying up those prior debts.

For student loan consolidation, borrowers have effectively two choices: Private and federal loan consolidation. We'll go through each one as follows.

Federal Loan Consolidation

When consolidating a student loan through a federal consolidation service, loan terms will typically extend somewhere between 10 and 30 years. These loans typically come with a fixed interest rate being the average of the interest rates between the other loans. What defines federal loan consolidation is that it is typically ruled by some fairly strict guidelines. see: loanconsolidation.ed.gov

Private Loan Consolidation

The major upside to private student loan consolidation is freedom as a customer. Rather than going through a single federal run organization, looking for a private loan allows you to explore the entire playing field and shop competitively. Many borrowers use this method in order to avoid high interest rates or get a better deal on the loans they've taken out to go to school.

Another bank consolidating private student loans is Wells Fargo: Call a loan specialist at 1-800-378-5526

In either instance, the total amount paid over time is invariably higher than the total amount of all the prior loans added up, but the primary benefit, being longer terms, easier payment plans and, in some cases, far lower interest rates, make the trade off more than worth it.

By shopping for private consolidation loans, the borrower will have much greater freedom in finding a debt consolidation plan that they can be relatively comfortable with.

Due to rising education costs, many former students like you borrowed non-federal (or private/alternative) loans in addition to federal loans to pay for their education. If you are repaying both federal and non-federal education loans, you may find repayment to be even more complex. For this reason, we offer Private Student Loan Consolidation information, partners, lenders and other related resources that may assist you in becomeing informed, before you apply.

Benefits of Private Student Loan Consolidation

You could enjoy some benefits when you consolidate private student loans

• Managing bills can be easier when you have only one consolidated private student loan to pay rather than many.
• Potentially reduce your interest rate when you choose auto-debit payments.
• Your repayment most often begins after your private student consolidation loan is funded.
• Choose repayment options.
• With some Lenders, Qualified borrowers can defer payments up to 12 months with forbearance option.

Private Consolidation Loan Eligibility

To save yourself valuable time, check to see that you meet the eligibility requirements for private student loan consolidation.

• Consolidate $10,000 to $150,000 in eligible private student loans.
• Be the age of majority (usually 18) in your state of residence.
• Be a U.S. citizen or U.S. Permanent Resident.
• Be a graduate or currently enrolled in the final term of a degree program at an approved postsecondary institution.
• Have at least satisfactory credit and a minimum income of $18,000 or apply with a credit worthy co-signer.

Examples of Rates and Fees

The actual rates and fees applicable to your loan may vary from these examples, depending on the school you attend, credit history, and repayment plan selected. For all APR examples, Origination Fees are sometimes added to the loan amount, but companies vary and ruls are changing. The APR can be a variable rate and may increase or decrease based on changes to the one-month LIBOR rate. The addition of a co-signer may lower the rates and fees associated with your loan.

Private Consolidation with Co-Signer:

Assumptions:
A $25,000 loan amount with a 25-year term (300 monthly payments) and a constant one-month LIBOR rate of 3.11%.   Principal and interest payments begin immediately after disbursement.