Benefits of consolidating private student loans
Although student and parent borrowers are each eligible to consolidate their loans, they may not consolidate their loans together.Married borrowers may no longer consolidate their loans together.The private consolidation loan has a new interest rate based on the borrower’s (and cosigner’s) current credit history.This interest rate may be higher or lower than the weighted average of the current interest rates on the borrower's private student loans.Also, federal student loans have numerous benefits and protections that are not available on most private student loans, such as generous deferments and forbearances, income-based repayment and public service loan forgiveness provisions.Federal education loans also offer death and disability discharges; only a handful of private student loan programs offer similar discharge options.For example, if the borrower rehabilitates the loan by making satisfactory repayment arrangements through his/her loan servicer, he/she may be eligible to consolidate the loans.
For example, suppose a borrower has a ,500 loan at 3.4% and a ,000 loan at 3.86%.
Definition: A private student loan consolidation is a non-federal, credit-based loan that allows you to combine multiple student loans together.
This can be a combination of federal and private debt.
Other forms of consumer credit, such as credit card debt, mortgages and auto loans, may not be included in a federal consolidation loan.
Only one borrower’s loans may be included in a federal consolidation loan.