Private Student Loan Consolidation

School is out and now it is time to join the work force. It is an exciting time until we realize that this means we have to start paying back all the student loans we took out. The ones for books, that small one we took to cover the trip to Las Vegas over spring break and even the one that we used to pay for classes.

This is the time when the excitement of getting a regular pay check fades as we realize that we have to pay all of them back. Time to look at private student loan consolidation, why consolidate?
We consolidate loans because it is easier to make one payment each month than lots of small ones.

Working out which is the best way to deal with consolidating your student loans can be a complicated process, it is not something to be rushed. Once you tie yourself into this agreement you are going to be paying for a long time.

Private student loan consolidation
It is called private because unlike federal student loan consolidation ,where you will be dealing with nelnet (part of the government) , you will have to deal with the financial institution that agree to take on all the debt.

Citibank private student loan consolidation
Chase private student loan consolidation

They are the two big players in the private student loan consolidation marketplace. While there are others that you can speak to, you will almost certainly want to contact both of these big banks and peruse their offer.

Fixed Rate Or Variable Rate Student Loan Consolidation?
Whether you look for a private student loan consolidation fixed rate deal or a variable rate loan really depends on whether you think interest rates will go up or down. This is a very risky choice to make as a slight increase in interest rates can result in a large jump in monthly payments.

Servicing large student loans can be expensive and it is always tempting to opt for a fixed rate consolidation loan. The downside of this is if the rates drop significantly over the next year or two you will not be able to do anything about it.

While we are sitting with a interest rate of 6% this may not seem to be too worrying, but ask your parents if they remember the 1980′s when the interest rate was as high as 14%. If you lock in your student loan consolidation at 14% and then the rate drops to half that you will be very unhappy.

Private student loan consolidation

Before you sign any papers to consolidate your loans with private or federal monies you should take some time to look at the debts you have. If you have many different loans and credit cards get the information all into one folder so you can add it up quickly.
While you can not consolidate your credit cards in with the student loans it is important that you know what you owe to whom. The interest rate on a student loan will normally be lower than you are paying on a credit card, so if you have any spare cash use it to pay off your credit cards first.

Think about the time it is going to take you to pay off all these student loans. Do not think that by taking out a private student loan consolidation loan you are getting away from the debt and can just put the payments off for ever. They will want regular payments whether you want to make them or not.

Federal or Private student loan consolidation
The loans you initially took out to attend school were probably federal loans and you can stay with the government or go private. You may find that the private sector financial institutions give you a better deal, but they are less forgiving than nelnet.

Why Consolidate Student Loans?

You can extend your loan period out to 30 years , which in turn reduces the monthly payment. The downside of this is that unless you start to make extra payments you could still be paying student loans when you are married with kids.
One place to pay. This is the biggest benefit for many people, make one lump sum payment every month. Paying the same amount to the same people every month makes it easier to manage. It also seems less scary only getting one piece of mail about your loan every month.