A Look at the Best Student Loan Consolidation Companies
Loan consolidation is the process of combining several student loans into a single loan from one lender. This option is available for several federal loans such as the FFELP (SLS, PLUS and Stafford), Health Professional Student Loans, HEAL, Perkins, FISL, Guaranteed Student Loans, and NSL. Moreover, there are lenders that offer private consolidation loans, which apply for private education loans.
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Benefits and Drawbacks of Student Loan Consolidation
Most borrowers decide to consolidate their loans, so they can make a single monthly payment to their total loan debt. Thus, it is more convenient to pay off your debts instead of making individual payments to multiple loans. Additionally, loan consolidation is suitable for those who can hardly keep up with their monthly payments that are based on a 10-year repayment term. When you consolidate your loans, you can extend the term to at least 20 years and reduce your monthly payments. Lastly, the interest rate on your new consolidated loan is unlikely to exceed 8.25 percent, which can help you meet your financial goals.
On the other hand, consolidating loans can extend your repayment period. While it can lower your monthly payments, you will need to pay for a longer period and incur a higher interest over time. You should also keep in mind that even though the interest rate would not go beyond 8.25 percent, it is still higher than the fixed rate you can expect with Perkins or Stafford loans. When you consolidate your student loans, you may end up losing your borrower benefits such as principal rebates, cancellation benefits, and interest rate discounts.
Before you decide to consolidate your loans, make sure you check the benefits and drawbacks of these options. If you are uncomfortable with your current repayment scheme and monthly payments, then you may choose to apply for loan consolidation. However, make sure you choose the right student loan consolidation company that offers competitive rates,top-notch services, and reasonable terms, so you can make an informed decision.
Top 7 Private Student Loan Consolidation Companies
If you have already made up your mind about consolidating your loans, the next thing you need to do is to choose a reputable bank or credit union that will cater to your needs. The following are 7 of the best loan consolidation companies including key features about each.
1. cuStudent Loans
This private student loan program is made up of more than 140 non-profit credit unions across the United States. The program includes the cuGrad private loan consolidation and cuScholar private student loan, and both of these provide refinancing options and competitive alternative loan for recent graduates and students.
Pros:
Undergraduate degree recipients are entitled to $7,500 to $125,000 debt consolidation amount while the maximum amount for graduate degree applicants is $175,000
Repayment term is up to 15 years
Offers variable rate loans
Interest rates range from 3M LIBOR + 4.25 percent up to 3M LIBOR + 6.75 percent
Repayment options available are graduated, level repayment, and interest-only for up to 4 years.
If borrowers make their payments (principal and interest) on time for 12 consecutive months, their cosigners will no longer be bound contractually
Cons:
Only credit union members are eligible to apply
Loan repayment lasts for a longer period, which means the principal and new interest will cost more
cuStudent Loans offers a wide range of services and competitive rates that make this institution a notable option as you choose the right student loan consolidation for your needs.
2. Wells Fargo Student Loan Consolidation
Wells Fargo is a renowned financial services company in the country. It gives qualified individuals a chance to consolidate their private student loans, which can help reduce and simplify their monthly debt payments. Interested applicants can use the companys online application available on their website, so they can determine their eligibility for the consolidation program.
Pros:
Choose from a fixed or variable interest rate
If you prefer the automatic payment plan form your active savings or checking account, you can significantly reduce your total interest rate by 0.25 percent
Wells Fargo customers can lower their interest rate by an additional 0.50 percent
School consolidation loans ($5,000 to $100,000) are available
Cons:
The service is limited to private student loans
With the excellent reputation and extensive selection of services available to qualified individuals, Wells Fargo is indeed one of the finest companies to rely on when it comes to consolidating your student loans.
3. Chase Student Loan Consolidation
Chase is among the leading financial services that you can rely on when it comes to consolidating your federal student loans. The company offers a streamlined and simplified online application, so you can immediately determine whether you are qualified for their services or not. Chase also has a reliable team of customer service representatives who can help you make an informed decision as you go through the intricate loan consolidation process.
Pros:
You can avail of a 0.25 percent ACH discount on your interest rates throughout the duration of your loan
Chase offers a secure online application process
Consolidating your loans with Chase can significantly minimize your monthly debt payments by up to 45 percent
The company website offers useful tools such as a student loan consolidation calculator and easy ways to check your federal student loan details
Minimum of $7,500 debt consolidation amount (federal student loans)
Cons:
It is difficult to determine your actual interest rate unless you have completed the consolidation period
Overall Chase offers efficient and professional services, as well as a comprehensive guide to loan consolidation, which can help individuals decide the best option for them.
4. Student Loan Network Consolidation
The Student Loan Network serves as a middleman that can assist you in finding the best consolidation loan company for your concerns. Thus, you can determine a more practical solution to minimize the stress associated with multiple loan payments and massive interest rates.
Pros:
Debt consolidation amount is between $10,000 and $300,000
Opt for a 20-year repayment term for multiple loans that are less than $40,000
Loans over $40,000 are entitled to a 30-year loan term
Private student loans consolidation can reduce your monthly payments by up to 50 percent
No application fees apply for private loan consolidation program
Reduce your interest rates by up to 0.25 percent if you pay your bills by automatic personal checking account withdrawal
For the initial 24 months, you are entitled to interest-only payments
Cons:
The entire process in consolidating your private loans may take about 45 days or more, depending on the documentation provided regarding your income, existing private student loans and expenses
Student Loan Network Consolidation offers loans programs for consolidating both private and federal loans. You can also qualify for other options such as interest-only payments and interest-rate reductions that will help you choose the best option for your specific needs.
5. Cedar Education Lending Private Student Loan Consolidation
Cedar Education Lending aims to offer reliable private funding options to qualified individuals who are currently pursuing their degree. The company also provides federal loan programs to post-secondary or primary graduates. With the competitive rates and borrower benefits offered by the company, you can reduce your financial concerns about existing student loan debts. In addition, Cedar Education Lending has launched its private student loan consolidation program, which has helped thousands of people with multiple private loans that continue to accrue high interest rates.
Pros:
Undergraduates may qualify for a debt consolidation amount of $7,500 to $125,000, as well as $175,000 in graduate school loan debts
Maximum repayment term is up to 15 years
No prepayment penalties apply
Interest ranges from 3M Prime + 1.50 percent to 3M Prime + 4 percent
Eligible borrowers are entitled to an interest-only repayment option that lasts up to 4 years
The cosigner release option is after 12 months with on-time interest and principal payments
Cons
Origination fee is 1 percent
Applicants with an annual income that is less than the request loan amount may not be eligible for the private student loan consolidation program unless you have a qualified cosigner
By consolidating multiple student loans with Cedar Education Lending, you can reduce your overall interest rates as you lengthen the term of your loan. Hence, you will be able to manage your debts efficiently and obtain some breathing room for paying off your other expenses.
- Compare Private Consolidation Rates Here
6. SunTrust Private Loan Consolidation
The company helps simplify the entire process of paying off your multiple private student loans. By consolidating your loans, you may opt for fixed or variable rate, as well as your choice of repayment scheme that suits your financial situation.
Pros:
Consolidate one or more private loans from any lender
Current private loan consolidations may qualify
Maximum debt consolidation amount for students with a Bachelors degree is $75,000 while a limit of $150,000 applies for graduate degree holders
Aggregate education loan limit includes private and federal student loans ($150,000 and $250,000 for Bachelors Degree and Graduate Degree holders, respectively)
Opt for a variable or fixed interest rate
Fixed rate ranges between 5.85 and 10.35 percent
No origination fees
SunTrust bank customers are entitled to an additional 0.25 percent reduction on their interest rates each time they make auto-debit payments from their SunTrust account
Repayment options are for 15, 20 and 25 years
No prepayment penalties
Cons:
Only U.S citizens or permanent residents are eligible to apply
Borrowers must be of legal age in their state, and they may not reside in Wisconsin, Iowa and Illinois
Cosigners may not be Illinois residents
Borrowers must meet the debt-to-income ratios, as well as credit requirements
Enrollment in auto-debit is required for borrowers
Consolidation of federal student loans is not eligible within the program
SunTrust offers students an opportunity to consolidate their loans and experience the benefits in minimizing their monthly loan payments and interest rates.
- Compare Private Consolidation Rates Here
7. SoFi Graduate Loan Refinancing
SoFi was established to provide individuals with an opportunity to address their issues regarding multiple loan repayments. It also connects alumni and students through a notable lending pool, as well as a social community where schools, students and alumni are entitled to great benefits. Thus, alumni receive a compelling higher bottom line return, and students obtain a much lower interest rate than what most private and federal lenders offer.
Pros:
Applicants are entitled to $5,000 up to $200,000 loan consolidation amount
Fixed rate interest of 5.99 percent and requires auto debit
No origination fees apply
Repayment terms of 5, 10 and 15 years
No application penalties for prepayment of consolidated loans
Cons:
SoFi loans are only available to graduates and students of selected programs and schools
The company has the right to discontinue benefits and products at any time without prior notice
Only U.S citizens and permanent residents are allowed to apply, as long as they meet certain requirements
SoFi is the only lending company that offers consolidation of federal loans with private loans. Hence, this converts federal loans into private loans, which are not government-guaranteed. Moreover, these are not eligible for the public service loan forgiveness program.
- Compare Federal/Private Consolidation Offers- Apply Now
Important Things to Consider
It is essential to understand that there are some direct and federal consolidation loans that may not be reconsolidated unless you plan to include additional loans with your new consolidation. For instance, if you decide to consolidate your federal loans obtained after your undergraduate degree, you may qualify to combine more loans with the ones consolidated, in case you plan to consolidate multiple graduate loans.
While private student loan consolidation can be a practical option to some people, the end result will be consolidating your private loans after combining both private and student loans. In most cases, this can lead to serious drawbacks for a number of reasons. If you decide to go back to school, for instance, you will no longer be able to defer your payments. Furthermore, you may lose your chances of seeking forbearance with private student loan consolidation when you encounter any form of financial hardship. It is also impossible to write off any of your interest rates as a tax deduction with private loan consolidation.
Bottom Line
As with any financial decisions you need to make, it is important to analyze both sides before you come up with your final choice. Weigh your options and consider several factors involved in consolidating loans, so you can maximize your benefits. Then, choose a reliable and established company that will cater to your specific needs and economic situation.
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