To consolidate or not to consolidate my private loans - that is the question

I have spoke to many students who are under the belief that consolidation is a means by which to lower your interest rate, however that is not the case. The real benefit to consolidating is extending your loan terms and minimizing your monthly payment. Granted, your rate may decrease as some lenders use the LIBOR index while others base your interest rate off the prime, but that is no guarantee.

So is consolidation right for you? Each person’s financial situation is different so it’s not a black or white answer. What I can tell you is this, if you are struggling with your monthly payment than consolidation will probably serve you well.

We’ve actually seen a spike in consolidation applications over the past month which is reflection on the current state of the economy. Many don’t have jobs or are only working part-time right now and need to lower their monthly payment. The job market is the worst it’s been in years. According to the Labor Department the unemployment rate just jumped to 6.1% the highest in 5 years. Over 600,000 jobs have been lost so far in 2008! I guess we should just be thankful we are in a recession and not a depression.

If you would like to find out what your interest rate and payment terms would be without obligation (click here).

Consolidation Does Not Require Multiple Loans

Here is my consolidation question of the day!

Question: I only have one private loan so I can’t consolidate, right?

Answer: WRONG! Loan consolidation is viewed as a debt management tool. The purpose is to extend your loan terms to help minimize your monthly payment. Regardless of whether you have one loan or ten you may apply for consolidation.

I guess when you are in the industry you never give this a second thought - it’s just common knowledge that you don’t need more than one loan to consolidate, but many don’t know that.

If you have $10,000 or greater in private student loans and are looking to consolidate (click here).