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Guide to Shopping for Student Loans

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Should I go through a private lender for a student loan consolidation?

The interest rate you are charged when you consolidate your student loans will vary if you go through a private lender. Typically you get the best student loan consolidation rates when you are working with the federal government to complete the consolidation. However, when interest rates are on the decline, it doesn’t hurt to check with a private lender to see what kind of rate they can offer you for a student loan consolidation. Find out what the monthly payment will be and how much the loan will cost you (including principal and interest) until the loan has been paid off. If this will save you money, it is definitely worth considering.

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Should I shop around for a private lender for student loan consolidation?

There are a number of private lenders who will work with individuals interested in consolidating their student loan debt. When you start repaying your student loans you may even find that a number of them will send you solicitations in the mail encouraging you to work with them to consolidate. However, don’t settle on one too quickly. There are so many companies willing to work with you that it doesn’t hurt to shop around a little bit. Find the lender who will give you the rate you want, along with other features including repayment options to suit your needs.

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Can I get a deal on a student loan consolidation?

When you are looking to consolidate a student loan, you may be able to find a number of deals through private banks. Often these will require you to meet certain credit granting criteria. If you feel this is the right move for you, then contact the lender to get more details on the loan. Information to obtain before completing an application include: interest rate, upfront fees, terms and conditions of repayment, prepayment penalties and penalties for late payments. Being well educated on the terms of your consolidated student loan can save problems for you and the bank later. When in doubt, ask!

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Can I get a fixed rate on my consolidated student loan?

Borrowers of Federal Stafford Loans are currently charged a variable interest rate. When you include these loans in a student loan consolidation, you may be able to get a fixed rate for the life of the loan. The rate is determined by taking the current interest rate charged on each of the loans included in the consolidation and determining the weighted average. The rate for these federally funded loans will not exceed 8.25 percent while a PLUS loan will not exceed 9 percent. When you go through a private lender for a student loan consolidation, the rate will vary. You can check around with various private lenders to find the best rate. When you consolidate through the federal government, you generally get a lower rate than what may be charged on a private student loan consolidation.

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Is there a tax benefit for a student loan consolidation?

As you complete your annual federal tax return, if you are repaying your student loans you may qualify for a student loan interest deduction. When you consolidate your student loans the rule still applies so you should still be able to claim the interest and reduce your overall tax liability. How much you can actually deduct depends on certain factors such as your income, so you should consult with a tax advisor for more information.

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