Private Consolidation Loans
By Mark Kantrowitz
A private consolidation loan replaces several private student loans
with a single loan, simplifying and streamlining the repayment
process. Private consolidation loans are also known as private
refinance loans.
Some lenders allow private consolidation loans to refinance
federal student loans in addition to private student loans.
If a borrower whose original private student loans were made with a
cosigner is able to refinance the loans without a cosigner, the
private consolidation loan will effectively release the cosigner from
his or obligation to repay the original private student loans.
List of Private Consolidation Loans
This table lists all education lenders who provide private consolidation loans.
The lenders are listed in alphabetical order.
|
| Alaska Commission on Postsecondary Education (ACPE) (Alaska Alternative Consolidation Loan) | Alaska | Private | 10, 15 | No | |
| Brazos Education Lending Corporation | Texas Residents | Federal
Private | 5, 7, 10, 15, 20 | No | Death Only |
| Cedar Education Lending | | Federal
Private | 5, 10, 15 | 12 | |
| Citizens Bank | | Federal
Private | 5, 10, 15, 20 | 36 | Both |
| Citizens One | | Federal
Private | 5, 10, 15, 20 | 36 | Both |
| College Ave (Student Loan Refi) | | Federal
Private | 5-15
Immediate or Interest-Only
(2 years) | | |
| Credit Union Student Choice | | Private | 15
Graduated, Level | 48 | |
| Dakota Education Alternative Loan (DEAL) (DEAL One Loan) | North Dakota | Federal
Private | 10, 25 | 48 | |
| Dakota Education Alternative Loan (DEAL) (DEAL Consolidation Loan) | South Dakota, Minnesota, Montana, Wyoming or Wisconsin | Federal
Private | 10, 25 | 48 | |
| Discover | | Federal
Private | 10, 20 | No | |
| Earnest | | Federal
Private | 5-20 | No | Both |
| Education Loan Finance (ELFI) | | Federal
Private | 5, 7, 10, 15, 20 | No | |
| First Republic Bank Student Loan Refinancing | California, Connecticut (Greenwich), Florida (Palm Beach and Jupiter), Massachusetts (Boston, Cambridge and Wellesley), New York, Oregon (Portland), Wyoming (Jackson Hole) | Federal
Private | 5, 7, 10, 15 | No | |
| Independent Community Bankers of America (ICBA) (iHELP Loan) | | Federal
Private | 10, 15, 20 | 24 | |
| Iowa Student Loan (Reset Loan) | | Federal
Private | 5, 10, 15, 20 | No | Both |
| KeyBank (Laurel Road) | | Federal
Private | 5, 7, 10, 15, 20 | No | Both |
| Kentucky Higher Education Student Loan Corporation (KHESLC) (Advantage Refinance Loan) | Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Massachusetts, Mississippi, Missouri, Nebraska, New Hampshire, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, West Virginia, Wisconsin, Wyoming | Private | 10, 15, 20, 25 | 36 | Both |
| LendKey Refinance Student Loans | | Federal
Private | 5, 7, 10, 15, 20 | 12 | |
| MEFA REFI Education Refinancing Loan | | Federal
Private | 7, 10, 15 | No | |
| MPOWER (Apply) | | Private | 1-15 | No | |
| Navi Refi (Navient) | | Federal
Private | 5-20 (one-year increments) | No | Both |
| New Hampshire Higher Education Loan Corporation (NHHELCO) (EDvestinU) | New Hampshire | Private | 15-25 | 24 | Death Only |
| PNC Education Refinance Loan (PERL) | | Federal
Private | 5, 10, 15 | 48 | Death Only |
| Purefy (formerly CordiaGrad) | | Federal
Private | 5, 8, 12, 15 (PenFed CU)
5, 10, 15, 20 (Citizens) | 12 (PenFed CU)
36 (Citizens) | |
| Rhode Island Student Loan Authority (RISLA) | | Federal
Private | 5, 10, 15
Level, Income-Based | 24 | Death Only |
| SimpleFi | California, Colorado, Illinois, Texas | Federal
Private | 5, 10, 15, 20 | No | |
| SoFi | All 49 states except Nevada. | Federal
Private | 5, 7, 10, 15, 20 | No | Both
(Not Parent Loans) |
| Splash Financial | | Federal
Private | 5, 7, 8, 10, 12, 15, 20 | Varies | |
| U-fi Student Loans Refinance (Nelnet) | | Federal
Private | 5, 10, 15, 20, 25 | 24 | Both |
| WSFS Bank | | Private | 15 | 48 | |
Notes:
- Cosigner release is defined as occurring after a specified number of consecutive on-time payments of principal and interest, if the primary borrower satisfies credit criteria. Some lenders may also require the primary borrower to satisfy minimum employment duration and minimum income requirements.
- Geographic restrictions require that the borrower be a legal resident of or enrolled in an eligible college or university in the specified state or states. In some cases, the cosigner, if any, must also be a state resident.
- Repayment terms may depend on the loan balance at the start of repayment.
- Death and disability discharges cancel the remaining debt when the primary borrower dies or becomes totally and permanently disabled. The death and disability discharges do not apply when the cosigner dies or becomes disabled.
- Lender terms and conditions are subject to change without notice. For the most up-to-date information about a lender's products and services, please visit the lender's web site.
- These lenders are all direct providers of private student
loans. They do not include student loan comparison and marketplace
sites, such as
Credible (owned by Fox Corporation),
eStudentLoan (owned by UNIGO),
Simple Tuition (owned by LendingTree) and
Student Loan Hero (owned by LendingTree).
Wait a Few Years After Graduation for the Best Rates
The interest rate on a private consolidation loan is based on the
current credit scores of the borrower and cosigner (if any). Higher
credit scores lead to lower interest rates. This is in contrast with
federal consolidation loans, where the interest rate is based on the
weighted average of the interest rates on the loans included in the
consolidation loan, rounded up to the nearest 1/8th of a percentage
point.
Borrowers should wait a few years after graduation before seeking a
private consolidation loan. The borrower's and cosigner's credit
scores decrease each year the student is in school because of
increased credit utilization. By the time the student graduates, the
credit scores are at their lowest point, yielding very high interest
rates. It takes several years after graduation for the credit scores
to improve, if the borrower pays all debts (not just the student
loans) on time.
Caution about Comparing Loans with Different Repayment Terms
Be careful about increasing the repayment term when applying for
private consolidation loans. Increasing the repayment term will reduce
the monthly payments, making them more affordable. But, increasing the
repayment term will also increase the total interest paid over the
life of the loan. For example, increasing the repayment term from 10
to 20 years will cut the monthly payment by about a third, but will
more than double the total interest paid over the life of the loan. It
is best to choose the repayment term with the highest monthly payment
the borrower can afford.
Warning about Refinancing Federal Loans into Private Student Loans
When a borrower refinances federal student loans into a private
consolidation loan, the borrower loses the benefits provided by
federal education loans. Think carefully about the tradeoffs before
including federal student loans in a private consolidation loan. Is a
lower interest rate worth it? A 1% decrease in the interest rate will
save more than $500 in interest per $10,000 borrowed on a 10-year
repayment term. Consider
the benefits you
will lose if you consolidate federal student loans into a private
student loan. The refinancing process is final and cannot be reversed.
Federal student loans offer income-driven repayment plans and a
variety of loan forgiveness and loan repayment assistance
options. Federal student loans provide several loan cancellation and
discharge provisions, including death and disability
discharges. Federal student loans offer deferments and forbearances of
up to 3 years in duration. Some federal student loans are subsidized,
where the federal government pays the interest during deferment
periods, such as during the in-school deferment and economic hardship
deferment. Borrowers can rehabilitate defaulted federal student loans.
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