Fixed Rate Private Student Loan Consolidation

Many students who graduate or leave college have private student loan debt, in addition to federal student loan debt. While consolidation is an available option for both types of student loans, given the current conditions in the student loan market, many private lenders are not currently accepting new applications for private consolidation loans. This does not mean that private student loan consolidation is impossible; it is just that with fewer lenders willing to provide private student loan consolidations, your options become more limited.

When you are considering consolidating your private student loans, you should always (at minimum) research 3 basic things: Are there any fees associated with the private consolidation loan, are there any prepayment penalties associated with the private consolidation loan, and is the interest rate on the private consolidation loan fixed or variable?

Your current private student loans are most likely variable interest rate student loans, meaning that at anytime your loans interest rates could fluctuate (typically interest rates will go up and not down). If you are already considering consolidation, a fixed rate private student loan consolidation could lock you into a lower rate for the life of the loan (a fixed interest rate will not fluctuate). While a fixed rate private consolidation loan will allow you to lock in a lower rate for the lifetime of the loan, it will also extended the repayment terms of your loan, which means you could end up paying more over the entire lifetime of the loan. For those who need to lower their monthly student loan payments because of other bills, etc… consolidation can be a good choice in that it will allow you to free up money over the short term.

In order to obtain a private consolidation fixed interest rate loan, you will need to apply to private lenders who are currently taking new consolidation loan applications. Most lenders will require for you to be currently making regular and timely payments on your student loans (no defaulted loans), and will also want to make certain you are in good credit standing. The interest rate and the resulting monthly payment amount you receive will be contingent upon you or your cosigners credit, so if you have poor or little credit history, obtaining a cosigner with excellent credit will be in your best interest before applying.

If you can find a low or fair interest rate, it will generally be to your benefit to opt for a fix rate loan. If you cannot find a fixed rate private consolidation loan (and you are a homeowner) you could consider using a fixed rate home equity loan to pay off your private student loans. Do your research, but typically private student loans have comparable rates to home equity loans, and a home equity loan may offer a fixed interest rate, where as a private lender may not.