Consolidating Private Student Loans
If you took out a lot different student loans over your years in college, you may be feeling overwhelmed by trying to keep track of them all. One possible solution is loan consolidation, but like any other loan option, it requires a little looking before you leap. For example, you should understand how consolidating private student loans is different from consolidating federal loans, since the two types of loans cannot be consolidated together.
Carolyn Bigda of the Chicago Tribune Online provided a good overview, and some tips, on consolidating private student loans in her Your Money column last month:
By the way, although consolidating private loans into a federal consolidation loan is not allowable, it sounds as though some students have consolidated, or tried to consolidate, their federal student loans into a private consolidation loan. The Student Loan Borrower Assistance Project at the National Consumer Law Center strongly advises students against doing this:
“WARNING: It is very dangerous to consolidate federal loans into a private consolidation loan. You will lose your rights under the federal loan programs once you choose to consolidate with a private lender. These include deferment, forbearance, cancellation, and affordable repayment rights. Also, federal consolidation loans generally have lower interest rates.”