Private Student Loans Blog

Private Student Loans: Refinancing Options

In order to help meet shortfalls created between college tuition and meager federal financial aid packages, many students have had to rely on private student loans. Even though private student loans are important for ensuring financing outcomes for higher education, these loans cannot be consolidated with federal student loans, creating obstacles for borrowers seeking to lower payments. Private educational loans cannot not be consolidated with federal student loans due to the fact that private student loans do not carry with them the same low interest rates as those guaranteed by the federal government. Even though borrowers may not be able to consolidate private and federal education loans there are some refinancing options that borrowers can consider to reduce overall costs and more effectively manage monthly payments associated with these loans.

Consolidating Private Loans: Borrowers can consolidate private student loans with similar loans to reduce the number of payments made to multiple lenders. Even though these loans cannot be consolidated with federal student loans, consolidation of private student loans can reduce payments by allowing the borrower to extend the term of the loan. While the borrower will pay more interest over the life of the loan, consolidation can reduce monthly payments making them more affordable in the short-term.

Home Equity Loans: In many instances, private student loans have the same interest rate as a home equity loan. For borrowers that have private education loans with variable interest rates, a home equity loan may provide a fixed interest rate, allowing the borrower to reduce and stabilize payments over the long-term.

Refinancing with a Co-Signer: Many financial institutions providing private student loan refinancing will consider lowering interest rates for borrowers with a co-signer. For individuals with numerous private student loans from multiple lenders, refinancing and consolidation may provide a viable means to reduce interest rates, saving borrowers thousands over the life of loan repayment.

Unfortunately, private education loans create a number of significant challenges when it comes to managing the costs of repayment. While these loans have become essential for students to acquire higher education, repayment may require the borrower to consider alternative refinancing options. Because these loans cannot be easily consolidated with traditional, government backed student loans, borrowers will need to explore their options when it comes to effectively reducing the costs of repayment. Even though consolidation may not be an option there are refinancing options which can help reduce repayment costs.