Do you have multiple loans either private or federal student loans and you want to consolidate them into a single monthly payment? For a complete list of student loan consolidation companies and their reviews read to the bottom of this article.
There are a few things you need to make sure you understand about the student loan market before you begin the process of consolidating.
The 6 Best Private Student Loan Consolidation Companies – Bottom of Article
Benefit of Consolidating Student Loans
There are 3 possible benefits to consolidating student loans.
- Lower Your Monthly Payments
- Take advantage of low interest rates
- Convenience of 1 montly payment
The main downside is extending the term of the loan and increasing the total amount you will pay in interest.
For example if you owe a total 50,000 in Student Loans at 5% interest and a 10 year term with 5
different lenders(10k/each) then consolidate to one lender and a 25 year term your monthly payments would go from $530/month to $292/month but the Total Interst Payable will go from $13,639 tp $37,688.51.
- Owe – $50,000
- 5 different lenders
- Interest Rate – 5%
- Term – 10 years
- TOTAL Monthly Payment – $530.33
- TOTAL Interest Payable – $13,639.31
Consolidate 5 loans to decrease monthly payment by extending length of loan
- Owe – $50,000
- 1 Consolidate lender
- Interest Rate – 5%
- Term – 25 years
- TOTAL Monthly Payment – $292.3
- TOTAL Interest Payable – $37,688.51
Student Loan Payment and Costs - 10 Year Term
Student Loan Payment and Costs - 25 Year Term
Do you want to consolidate Federal or Private Student Loans?
Federal Student Loans are issued by the federal government through their Student Aid website. These loans are typically the most advantages and make up a large amount of the student loans people carry.
Private student loans typically have more aggressive re-payment plans and less advantageous interest rates however can be much easier to consolidate.
How To Consolidate Federal Student Loans
If you hold federal student loans with the government you have 3 options.
Option 1 – Special Direct Consolidation Loans (limited time)
Special direct consolidation loans or (Obama student loan) are a temporary opportunity for borrowers who meet a set of criteria to roll their loans into one Loan held by the government.
Borrowers that are eligible must…
- Have one or more student loans held by a commercial lender in the Federal Family Education Loan.
- Have one or more student loan held by the Federal Government
The benefits of the Special Direct Consolidation Loans include reducing interest rate and not having to significantly change your repayment terms if you do not want to.
The difference with the Special Direct Consolidation Loan from a traditional loan is that each loan consolidated retains its original repayment term allowing you to save money in interest over the life of the loan.
A second key difference with the Special Direct Consolidation Loan is that it allows other Student Loan Companies loans to be consolidated with this Federal program
Option 2 – Direct Consolidation Loans
A direct consolidation loan is a way to consolidate multiple federal student loans into one. When you consolidate federal student loans you will reduce your monthly payments by extending the length of the loan and potentially reducing the interest rate.
The benefit of a direct consolidation loan is that you can significantly reduce your monthly payments however you should also determine what the added interest cost over the life of the loan will be.
Option 3 – Consolidate Federal Student Loan into a Private Consolidation Loan
If you hold a student loan from the Federal Government and want to consolidate it you may be able to find student loan companies that offer better interest rate than you can find from the Government.
The downside to consolidating a Federal loan into a private loan can be the aggressive interest rate increases from some companies. Some student loan consolidation companies will offer a teaser interest rate to attract student to consolidate their federal loan with them but then gradually increase the rate.
This option is not recommended! Make sure the benefits of consolidating a federal student loan into a private loan outweigh the costs.
How To Consolidate Private Student Loans
When you get a private student loan it falls under some of the same rules as a federal student loan, specifically if you declare bankruptcy your student loan debt will not go away.
When you consolidate a private student loan you achieve the most significant benefit of being able to combine multiple monthly payments into one payment to one loan modification company.
It can be a good idea to consolidate private student loans if your Credit Score has improved.
There are websites where you can check your credit score for free – Free Credit Score Check
Check your Credit Score – Fast, Free & Easy with Enrollment at CreditReport.com
Consolidate your student loan and mortgage – One option if you are a few years out of College and you own a home which has appreciated in value is to take out a Home Equity Line of credit and pay off your student debt. This is essentially consolidating your Student Loan with your Mortgage. The benefit is the ability to have the lower payments
6 Best Private Student Loan Consolidation Companies
1. Wells Fargo Student Loan Consolidation
Wells fargo offers private student loan consolidation. You have the option to have both fixed or variable rates on your consolidated loan. The application process can take from 45-60 days.
Wells Fargo has two options to lower your interest rate. You can lower your interest rate by 0.25% by setting up automatic payments.
The second way to lower your interest rate is if you are a Wells Fargo customer you can lower your interest rate by 0.5%
Wells Fargo Student Loan Consolidation
2. Student Loan Network Consolidation Review
The student loan network offers to get you in touch with lenders who can help consolidate your student loan.
Because they are essentially a middle man they can help when you are stuck getting a consolidation loan from some of the larger private student loan consolidation companies.
Student Loan Network Consolidation
3. Chase Student Loan Consolidation
Chase has offered consolidation loans in the past. They have the highest satisfaction rating for customer service but do not offer the best interest rates.
Chase would be a great option to consolidate your student loans if you already have any business with them.
Chase Student Loan Consolidation
4. Next Student Loan Consolidation
If you are looking to consolidate your student loans quickly than Next Student Loan Consolidation may be the right option for you. They pride themselves on their speed at which they can consolidate a student loan.
Like payday cash advances, they are financial tools that are often mis-used. Unless you absoloutly need to consolidate your loans quickly I would recommend you use caution with a Next Student Loan Consolidation.
Next Student Loan Consolidation
5. Cedar Education Lending Consolidation
Cedar Education Lending offers Private Student Loan Consolidation ranging from $7,500 to $125,000 with a 15 year term and interest rates as low as 4.75%.
One unique offering from this consolidation company is the “interest only option” for four years. If you are struggling to make your monthly payments and extending the repayment term to 15 years is not enough to make the payments affordable than the interest only payment option may be worth investigating.
Another unique aspect to a Cedar Education Consolidation is the co-signer release if you make 12 consecutive payments.
Cedar Education Lending Consolidation
6. cu Student Loans Consolidation
The EdSucceed Private Student Loan Consolidation offered by cu includes many of the benefits the other companies offer. These benefits include a 15 year repayment program, 12 consecutive on time co-signer release and a 4 year interest only option.
Some of the requirements include a monthly salary of $2,000 and verifiable income for the co-signer.
The last 2 companies offer very similar loan consolidations.
cu Private Student Loan Consolidation
My name is Sam Vanderbilt, I graduated school 10 years ago with $200k in Student Loans held by 7 different lenders.
I’ve used Cedar Education Lending for a Private Student Loan Consolidation in the past and they worked out good. I would recommend them. It was pretty simple.