Consolidating the private student loan is an excellent way to replace your multiple private student loans by a single monthly payment. Debt consolidation on private student loans may not be possible until you have graduated from school. However, this option will help ease your financial worries; so it is best to apply debt consolidation on a private student loan if you are worried about managing your loans efficiently.
Advantages of private student loan consolidation
It makes real sense to consolidate your private student loans since individual private student loan has short payback period, high interest rate. So as soon as you can consolidate your private student loans into a single monthly payment and potentially lengthen your repayment period, the better off you will be.
Here is the list of benefits you can enjoy when you opt for debt consolidation on private student loans. In this method, you can take out a consolidation loan with which you can replace all your existing private student loans.
- Lower monthly payments
With private student loan consolidation, you can pay off your debts with a single monthly payment. When you consolidate your debts, you monthly payment can get reduced in comparison to the sum total of your existing payments on your private student loans. The monthly payments can be lowered in two ways.
- Extending the repayment term
Monthly payments can be lowered down by extending the loan repayment term.
- Low interest rates
In some cases, interest rates are lowered. In fact the debtors with improved credit situation may take out loan with a relatively lower rate of interest.
Apart from above, you may enjoy some other benefits, which are discussed below.
- Repayment Term
The borrowers who are undergraduates may receive up to a 25-year repayment term. The borrowers who are graduates may receive up to a 30-year repayment term. However, this may vary according to different lenders.
- Internship/residency & military deferment
You may get the facility of a 36-month deferment for all active-duty military personnel and a 48-month deferment for medical/dental residents.
- No Prepayment Penalties
All payments which are in excess of the scheduled payments directly go towards reducing the principal amount. However, all lenders may not offer you this facility.
Whatsoever, it is extremely important that you continue to make all your regular payments on the student loans that you are consolidating until your consolidation loan is finalised.