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If you feel like you’re swimming in private student loan debt, you’re certainly not the only one. The cost of going to college has skyrocketed over the past decade, and many Americans are feeling the crunch. One option to help relieve yourself financially is to look into consolidating private student loans.
If you’re looking into consolidating private student loans or refinancing, that means you hope to replace multiple student loans with a single new loan. The incentive to doing this is that if you’re able to refinance the loans into one with a lower interest rate, you can save a great deal of money over time.
What matters the most in making this a reality is to look at your financial history. This can include your job history, your credit score, your income, and your educational background. You’ll want to aim for a credit score of at least the high 600s to qualify for better interest rates, which can range anywhere between 2 percent and even above 9 percent. The higher your credit score, the lower your interest rates can be!
You should consider consolidating private student loans if you have the following:
One thing you should keep in mind is that if you switch from a federal student loan to a private one, you may lose consumer protections that are specific to federal loans. In other words, you should do your homework so that you won’t lose certain options such as being able to tie payments to income and opportunities that involve loan forgiveness.
If you’re only interested in consolidating private student loans, know that you cannot transfer a private student loan into a federal student loan. However, you can consolidate both private and federal loans with a private lender if you choose to do so. Your overall goal should be to end up with a single payment that makes things a lot easier while also helping you to save money over the long term.
If you need help figuring out whether consolidating private student loans is your best option, there are many online calculators available online to help give you an idea of what your new monthly payments might be like if you chose to refinance or consolidate. It’s always a good idea to consult with a financial planner before making a big move such as consolidating private student loans, too.
