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Private Student Loan Consolidation
Private student loans cannot, in general, be consolidated with
federal student loans. The low interest rates on federal consolidation
loans are not available to private education loans. Nevertheless,
there are several options for refinancing private education loans.
Since most private education loans do not compete on price, a private
consolidation loans is merely replacing one or more private education
loans with another. So the main benefit of such a consolidation is
obtaining a single monthly payment. Also, since the consolidation
resets the term of the loan, this may reduce the monthly payment (at a
cost, of course, of increasing the total interest paid over the
lifetime of the loan).
However, since the interest rates on private student loans are based
on your credit score, you may be able to get a lower interest rate
through a private consolidation loan if your credit score has improved
significantly since you first obtained the loan. For example, if
you've graduated and now have a good job and have been building a good
credit history, your credit score may have improved. If your credit
score has increased by 50-100 points or more, you may be able to get a
lower interest rate by consolidating your debt with another
lender. You can also try talking to the current holder of your loans,
to see if they'll reduce the interest rate on your loans rather than
lose your loans to another lender.
Home Equity Loans
Private education loans tend to have interest rates that are
in the same ballpark as home equity loans. If your private education
loan has a variable interest rate, you might consider using a fixed
rate home equity loan to pay off the private education loan,
effectively locking in the interest rate.
Education Lenders
The following education lenders will consolidate private education
loans. These are private consolidation programs, so the interest rates
are dictated by the lender, not the government. There may be
additional fees charged for originating these loans.
You should not consolidate your federal student loans together with
your private education loans. They should be consolidated separately,
as the federal consolidation loans offer superior benefits and lower
interest rates for
consolidating federal student loans.
When evaluating a private consolidation loan, ask whether the interest
rate is fixed or variable, whether there are any fees, and whether
there are prepayment penalties.
The lenders are listed in alphabetical order. No significance should
be inferred from the order in which the lenders are listed.
| Lender |
Description |
| Citi Student Loans |
$7,500 minimum, $275,000 maximum. Up to 30-year term plus any periods
of deferment or forbearance. No prepayment penalty. 0.25% interest
rate reduction for ACH. 0.50% interest rate reductions after 48
consecutive, on-time monthly payments. Choose a fixed or variable
interest rate. Loan origination fee of 0 to 3%. Rates as low as
3-Month LIBOR plus 2.50%, up to 3-Month LIBOR plus 5.25%. Co-signer
release after 36 consecutive, on-time monthly payments, subject to
credit requirements.
|
| Educated Borrower Private Consolidation Loan |
$7,500 minimum. $300,000 maximum. Up to 30-year term.
Introductory rate of LIBOR + 1% to LIBOR + 1.75% during the first
year. After the first year the rate increases to LIBOR + 5% to LIBOR +
5.75%. Origination fee of 0% to 5%. No prepayment penalty.
|
| Education Finance Partners Private Consolidation Loan |
$7,500 minimum. $535,000 lifetime maximum. Up to 30-year term. No prepayment penalty. 0.25%
interest rate reduction for auto-debit. Choice of
variable or fixed interest rate. Best variable rate is 3-month LIBOR +
2.00%. Best fixed rate is about 1.5% higher and is updated weekly. No fees.
Co-borrower release after 24 consecutive months of on-time payments,
subject to credit requirements. |
| Key Education Consolidation Loan |
$7,500 mimimum.
$75,000 maximum for non-Key debt; no maximum for Key education
debt. Choice of 10, 15 or 30 year repayment term. Variable rate loan,
with rates pegged to repayment term:
3-month LIBOR + 3.75% (10 years),
3-month LIBOR + 4.25% (15 years), and
3-month LIBOR + 5.00% (30 years). No prepayment penalty. No fees.
|
| MELA Private Consolidation Loan |
$10,000 minimum. No aggregate loan limit for MELA loans. $125,000
aggregate loan limit for non-MELA loans. Variable interest rate
updated annually based
on the MELA tax-exempt bond auction rate plus a
spread of 3.5%. The 2007-08 MELA auction rate was 3.85%, yielding a
consolidation interest rate of 7.35%. The same interest rate is
provided to all borrowers, regardless of credit. The fees vary based
on credit score, with 1% for excellent credit, 3% for good credit, and
6% for fair credit. The repayment term is 15-30 years, depending on
the amount owed (15 years for up to $20,000, 20 years for up to
$40,000, 25 years for up to $60,000 and 30 years for more than
$60,000). 0.25% interest rate reduction for auto debit.
Borrowers must be a Maine resident, existing MELA borrower or a
student who attended a Maine college.
There must be a Maine affiliation to apply for this loan.
|
| NextStudent Private Consolidation Loan |
$7,500 minimum. $300,000 maximum.
Up to 30-year term. No prepayment penalties. Variable rate loan.
Interest rates of 3-month LIBOR + 1.00% to 3-month LIBOR + 1.75%
during the first year
and 3-month LIBOR + 5.00% to 3-month LIBOR + 5.75% after the first
year. Interest rates vary quarterly.
Origination fees of 0% to 5%. No prepayment penalties.
|
| Sallie Mae Private Consolidation Loan |
$5,000 minimum. $275,000 maximum (without cosigner), $400,000 maximum (with cosigner).
No prepayment
penalties. Variable rate loan. Interest rates vary from
Prime - 0.5% to
Prime + 6.5%, depending on credit history.
Repayment term of 15 to 30 years based on loan balance (15 years up to
$20,000, 20 years up to $40,000, 25 years up to $60,000 and 30 years
for more than $60,000).
No fees. No prepayment penalty.
|
| Student Loan Network Private Loan Consolidation |
$7,500 minimum. $300,000 maximum. 20-year term for loans less than
$40,000. Up to 30-year loan term for higher amounts. Variable rate
loan.
Interest rates of 1-month LIBOR + 1.00% to 1-month LIBOR + 1.75%
during the first year
and 1-month LIBOR + 5.00% to 1-month LIBOR + 5.75% after the first
year (updated quarterly).
Origination fees of 0% to 5%.
Interest-only payments available for the first two years of the loan.
0.25% interest rate reduction for auto-debit.
Principal reduction of 1.00% to 1.50% after on-time payments for
initial 48 months.
|
StudentLoans.com Private Consolidation Loan
(A Brazos company.) |
There is only minimal information about the loans on the web
site. This loan appears to be a private label of the Education Finance Partners
Private Consolidation Loan.
|
| Wells Fargo Private Consolidation Loan |
$5,000 minimum. $40,000 to $100,000 maximum, depending on
credit. Aggregate loan limit of $100,000 (including other education
debt).
Up to 15-year term.
Variable rate loan. Interest ranges from Prime + 0.0% to Prime + 6.75%.
No origination fees.
Up to 0.50% interest rate reduction for auto-debit.
0.5% interest rate reduction after making 48 initial on-time monthly payments.
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