Looking for information on private student loans consolidation rates? You have come to the right place. First off, you need to know that private student loans cannot be consolidated into loans that can match the interest rates provided by federal student loan and aid programs. It just isn’t possible. But, there are ways to reduce the brunt of high interest costs that you will continue to pay to private lenders. Also please remember that it isn’t ideal to consolidate your federal student loans with private student loans, as federal student loans give you many benefits that you could potentially lose, if you choose to consolidate it along with private student loans.
When is private student loan consolidation possible? General expectations
- When you are employed
- When you are not enrolled in college, even if you didn’t graduate
- When your student loan repayment history is spotless or very good
- When your requested loan amount is less than your annual income
If you don’t meet some or even all of the above requirements, private student loan consolidation is still not completely out of the question, provided you can bring in a strong co-signor who will vouch for you, with their very good credit score and credit history.
Has your credit improved since the time you first got your private student loan?
Assuming you first received your private student loan without the help of a cosigner, your lender would have levied an interest rate that was reflective of your credit score. There is a good chance that your credit score could have improved since the time you applied for your student loan, maybe because of a job and the accompanying improvements to debt to income ratios.
If it has, and has so significantly, like with a 50-150 point increase, you have the liberty to approach private student loan consolidators who will consolidate your student loan payment or multiple student loan payments into one reduced payment, with an interest rate adjustment that is favorable to you.
Even if you don’t catch an interest break when you consolidate your private student loans, there are chances that you can at least ease up your cash outflow, as consolidation generally means that your repayment period is reset, giving you a longer time to repay the loan, with smaller monthly payments, since you already paid back on the loan thus far.
If your credit score has improved significantly, you can first try to contact your current lenders and ask them to revise your student loan terms, or that you will go somewhere else to consolidate said student loan. Lenders will generally hate to see customers go and will try to work with you to give you a new rate that is advantageous to you, particularly if your credit score has improved significantly.
Re-working the terms of a private student loan lender will also mean that you can save yourself from the hassle of scouting for debt consolidators.
Where can you consolidate your private student loan?
|Loan Min to Max||RePymt Lngth||Fixed Rate||Variable Rate||PrePymt penalty||Origination Fee||Cosigner Release**|
|Citizens One Education||$10k to $170k||5-20 Yrs||4.74% to 7.99%||1 M LIBOR + 2.11% to 1 M LIBOR + 7.40%||No||No||After 36 Months|
|Citizens Education Refinance||$10k to $130k||5-20 Yrs||4.74% to 7.99%||1 M LIBOR + 2.11% to 1 M LIBOR + 7.40%||No||No||After 36 Months|
|Credible*||$5k to n/a||5-25 Yrs||3% to n/a||n/a||Depends on lender||Depends on lender||Depends on lender|
|Wells Fargo||$5k to $100k||5-15 Yrs||6.24% to 10.99%||3.74% to 8.74%***||No||No||After 24 months|
|SoFi*||$5k to n/a||5-15 Yrs||3.5% to 7.74%||2.22% to 6.02%***||No||No||n/a|
|iHelp||$10k to $150k||10-20 Yrs||4.75% to 9.0%||LIBOR + 2.5% to LIBOR + 8.5%||No||No||After 24 Months|
|Darien Rowayton||$5k to n/a||5-20 Yrs||4.45% to 7.45%||3 M LIBOR + 3.45% to 3 M LIBOR + 5.9%||No||No||n/a|
- Other general factors that could apply are;
- A 0.25% discount may be awarded on interest rate, if you can sign up for automatic payments
- Bringing a cosigner to sign for your loan will without a doubt reduce your rates
- Some lenders require that you earn at least $24,000 a year, to be able to qualify for private student loan consolidation
- All lenders listed above give you the option to consolidate your private student loans with federal student loans
*Credible and SoFi aren’t individual lenders but an aggregation service that work with various vetted lenders. They will present you with many borrowing options from which you can choose one.
** Though cosigner release is generally possible after the 24 month or 36 month periods mentioned in the table, it is subject to change and discretion of the lender. For example, release may be possible after 24 or 36 months only if repayments have been perfect. Also, cosigner release might be cancelled if the primary borrower has lost his or her job or has a credit score and history that has significantly changed for the worse, since the time of applying.
*** These are example variable rates based on current LIBOR rates. These will obviously change with changes to LIBOR in the future.
Understanding Variable interest rates
As you can see from the table above, you have the option to choose a variable interest rate instead of the fixed rate that most people usually choose. When you do so, the interest rate you pay is pegged to the LIBOR (London Inter Bank Exchange Rate). When this rate increases, you pay more. When this rate falls, you pay less.
When choosing a Variable interest rate might be beneficial for your private student loan consolidation?
If you plan to pay off your student loans in 5 or under 10 years , going the variable rate route might be beneficial, as interest rates will generally not drastically change in 5 years. That said however, it can’t be ruled out completely.
The advantage to choosing a variable rate is that variable rates will generally be lower than the fixed rate that you will pay. in the near term. But, the lower rate comes at the price of risk, a risk that your interest rate could be significantly higher than a locked in fixed rate, especially after several years.
Here’s an idea of how LIBOR rates have changed over different timelines. (Numbers are indicative as of today, the 2nd of August, 2016)
Over the last month, the 3 M LIBOR has ranged between 0.76% to 0.84%
Overt the last year, the 3 M LIBOR has ranged between 0.76% to 0.33%
Over the last 5 years, the 3 M LIBOR has ranged between 0.37% to 0.76%.
Over the last 10 years, the 3 M LIBOR has ranged between 5.37% to 0.76%
Over the last 20 years, the 3 M LIBOR has ranged between 5.63% to 0.76%
We are currently living in a time when interest rates are at an all time low, thanks to very generous governments that are infusing Billions of dollars to revive economic growth. There is no telling where the LIBOR will stand 10 or 20 years from now. This is a risk that you will have to take.
Even if you can’t repay your consolidated student loan in 5 years, it might still make sense to take the variable rate route as your outstanding will decrease over time, meaning that interest rate hikes will not have as much as a devastating effect they will have when your outstanding is very large.
But then, a significant increase in LIBOR rates is always a risk, even if you want to repay in just 5 years.
You will have to take a very subjective call, depending on your personal situation.
What if I can’t bring in a cosigner and can’t qualify for private student loan consolidation on my own?
If you are in this situation, you might want to consider a home equity loan, assuming you own a home, even if the mortgage is an ongoing one. Depending on your down payment and mortgage repayment, you will have a certain equity in your home. This can be used as collateral to seek out a home equity loan with which you can close out your student loans. In essence, the home equity loan will become your student loan.
The obvious risk here is that you risk the chance of losing your home, should you be unable to repay your consolidated private student loans. But then, it gives you an option if you can’t bring a cosigner to the table. You can read about a few more options for seeking private student loans without a cosigner here.