How to Consolidate Private Student Loans

One of the main concerns of a student about to graduate is how to pay off his existing student loans. The cold, harsh truth of the matter is that you start paying your dues six months after graduation. And for most graduate students, this may be a scary thought considering the current challenges our job market is facing today. Even if you do get a job, chances are, you will have to start from the bottom as a minimum-wage earner with an entry level salary that is just enough to cover your living expenses.

Paying off your student loans however need not be a hassle. You can consider consolidating private student loans to simplify your payment schemes. To consolidate means to merge all of your existing loans together for one payment and to have a single interest rate for all of them. This could help you in your budget planning. With a single payment every month, you are sure that you are not missing any payments and that you can keep a close eye on how much of your loans you have paid up so far.

Ideally, if you have a good credit rating, consolidating private student loans would be a breeze. You can get good consolidated interest rates that are much lower than what you have right now. However, if you appear to have bad credit rating, you do have the option to get a cosigner to guarantee your loan and still have the chance to get a much lower rate. If your cosigner has a good credit score, then chances are, you will be given some competitive rates.

If you would like to go on consolidating private student loans but are not sure whether you will be able to make a payment right away, you may consider these options:

Deferment – This means that you will be allowed some leeway by the bank to defer on your payments until such time you can already make regular deposits. Your loans will still accrue interest, but at least you will not be penalized for not paying on time.

Educational Deferment – The difference of this type of deferment is that the reason you are unable to pay is because you are going back to school. For as long as you are attending classes, even if part time, you are not forced to pay on your loans. Interest will still continue to build up, but you will not be required to make a payment until six months after you stop attending your classes.

Forbearance – This is an option for the student to take if he or she had encountered some financial difficulty. You may pause your loan payments for up to six months until you have passed the stage of deep financial crisis. Financial difficulties include that of prolonged unemployment or medical illness or emergency.

You only get one shot at consolidating private student loans so be wise in your decision making process. Make sure you have reviewed all of your options and that you have researched well your alternatives. Try to compare interest rates and terms and conditions prior to making that next step to loan consolidation.


  1. Marilyn Thompson says

    My son has private loans with Chase, PCN, and Firstmark. He would like to consolidate them but he has bad credit and we( parents) have bad credit. Forebearance has been denied so he can get caught up. Is there a Federal Program, based on his IBR, that he can enroll in to consolidate these private loans??

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