Private Student Loan Consolidation or Refinancing
Many of us have private loans at variable interest rates, sometimes with no cap on how high the rate can climb.
If you have expensive private student loans and good credit, refinancing may be available and worthwhile. For example, with a strong credit score, you might be able to refinance at a lower or fixed interest rate instead. Unfortunately, if your credit score is low, or you are experiencing financial distress, you’ll probably have a difficult time qualifying for the best refinancing terms.
And BEWARE of consolidating federal loans into a private consolidation loan. Private student loans rarely include protections like deferment, forbearance, cancellation, Income-Based Repayment, and Public Service Loan Forgiveness. Although a few private lenders are incorporating provisions designed to mimic some of the federal benefits, be careful to evaluate the specifics.
Applying for credit can lower your credit score a little, but much more important to your credit score is whether you pay your bills on time and your balance on revolving credit accounts (like credit cards). According to MyFICO, private student loan shopping inquiries made during a 30 day period will have little to no impact on credit score. But if you apply for multiple new credit lines in a short period of time, or if you have few accounts or a short credit history, the impact can be greater. Read more from MyFICO.
If you decide to investigate refinancing private student loans, shop around for the best terms and read the fine print. Twice.
I don’t keep a fully updated or comprehensive list of private student loan companies, but here are some lenders I’m currently aware of that offer refinancing of private student loans:
- Cedar Education Lending
- Chase BND Student Loan Services
- Citizens Bank
- CommonBond
- cuStudentLoans
- Darien Rowayton Bank (DRB)
- Education Success Loans
- iHelp
- Next Student
- Rhode Island Student Loan Authority
- SoFi – Social Finance
- StudentLoan Consolidator
- WellsFargo
