Private School Loan Consolidation - Is It For You

As the cost of college education continues to rise, many students and parents turn to college student loans to assist with the cost. Covering the cost of dorms, books, food, transportation, tuition and other expenses is often times a difficult challenge for students to overcome.

As students take on financial aid in the form of student loans, its not uncommon for a student to have multiple loans as they move closer to graduation. Loans become due after a six to nine month grace period which begins at graduation.

Private school loan consolidation can be a solution that reduces the financial load of managing multiple student loans as they come due. Private school loan consolidation is the process of combining multiple private student loans (as opposed to federal student loans) into a single consolidated loan.

The main purpose of obtaining a private school loan consolidation is to lower monthly payments, reduce the interest rate and extend the terms of re-payment. Re-payment terms range from ten to thirty years. A fixed interest rate can also be obtained which is advantageous. If a student has all federal loans, they should not use private school loan consolidation as it would result is a loss of the benefits that come with federal loans.

If a student has borrowed more than $5000 in private loans or if the existing student loan debt exceeds 8% of the students income, they should look into consolidation.

Factors to be considered before making a final decision on student loan consolidation include: - Lenders - Interest rates - Total loan payments - Credit history - Payments remaining on original loans

For some students, the ease of managing a single payment is the outstanding benefit of private school loan consolidation. While it is true that loan consolidation will lower monthly payments, it will also lengthen the terms of re-payment, thereby increasing the overall amount of interest paid over the life of the loan.

The student must decide which works best for him/her - lower payments over a longer period of time or getting out of debt earlier by paying off the initial loans on time.