Consolidate Private Student Loans With A Fixed Interest Rate

For most people, lingering student loan debt is usually the one and only thing that might tarnish an otherwise very idyllic memory of a person's college years.

Many former college students have not one, but several, student loans left over from their college days. Whether you graduated 6 months, 1 year, or 10 years ago, if you have multiple student loans, you are having to deal with a lot of inconveniences, like:

* having to make multiple payments to different lenders each month
* having loans at different interest rates
* having a mix of variable and fixed-interest loans

Not only that, but many college graduates who carry student loan debt complain that they are having trouble making their payments each month. Fortunately, there is a potential solution: student loan consolidation.

Student loan consolidation is simply the act of taking out a single loan while paying down two or more existing loans. Potential benefits of consolidation include:

* making just one payment each month rather than multiple payments
* the ability to reduce the total interest cost of your loan
* the ability to make lower monthly payments, either by qualifying for a lower interest rate, spreading out your repayment term over more time, or both

You may or may not recall this, but back when you were in school there were many different options for you in terms of student loan lenders. In terms of very broad-brush categories, the two main ways were either through getting a federal loan from a federal loan program, or qualifying for a private student loan through a bank or another private financial institution.

The choice of loan(s) you made way back then will affect how you should approach consolidation now. Here are some of the differences between the two major types of loans:

Private:

You should consolidate through a private student loan lender if your existing loans are privately-funded. With a private consolidation loan, you will (depending upon the lender you choose) have the choice of a fixed or a variable interest rate. Your new interest rate will be determined based upon your current credit score, as well as the current level of some given interest rate standard like the Prime Index. With private loans, you may end up having ot pay a loan origination fee. However, finding a co-signer for your loan could help you qualify for a lower rate.

Federal:

If your current loans are federal loans (e.g., Stafford Loans, PLUS Loans, Federal Perkins Loans, HEAL Loans, FFELP, Direct Loans, etc), then you will want to consolidate with the federal student loan consolidation program. This program requires that you go through no credit checks. Rather, your new fixed interest rate will be calculated based upon an average (a weighted average) of your existing loans. There are no loan origination fees of application charges for a federal student loan consolidation.

To qualify for the best rates for a private consolidation loan with a fixed rate, take these steps:

1. Add up the principal balances for all of your existing loans; then, find the weighted average current interest rate (for comparison purposes)
2. Run your credit report with each of the major credit bureaus: Experian, Equifax, and TransUnion; be sure to examine each report closely and fix any errors you find there
3. Make a list of at least 3 reputable private student loan consolidation lenders
4. If you have anyone in your family who would oblige, find a co-signer who has a good or excellent credit score - this can help you keep your new loan's interest rate as low as possible
5. Fill out an application with each lender and compare rates