Student Loans
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Private Loan Consolidation

Can Private Student Loan Consolidation Lower My Monthly Payment?

In many cases the answer is “Yes.” Private student loan consolidation allows a borrower to extend the repayment term of the loan. More monthly payments on the same principle amount of debt will – all else being equal – lower the monthly payment. Frequently the monthly payment associated with private student loan consolidation is meaningfully lower when compared to the existing private student loans of the borrower.

In addition to extending the repayment, private student loan consolidation also frequently results in a lower interest rate margin for the borrower. Since private student loans are made to students to help pay for their education – when it is not known whether the borrower will complete their course of study – and since many lenders have determined that students that complete their course of study are better credit risks than those that do not, graduates are often able to obtain a better interest rate margin through a private consolidation loan than they have with their existing private student loans. A better interest margin will – again all else being equal – result in a lower monthly payment for the borrower.

Because all factors in a private student consolidation loan may not be equal, it is important that borrowers find out all the necessary details of any private student consolidation loan they may be considering before making the decision to proceed.

Posted by: Fundamental Administrator

2/19/08

 

 
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