Which Student Loan Consolidation Companies Can You Trust?
In 2016, there are literally hundreds of companies offering to consolidate private student loans, but before you choose to consolidate your private student loan debt, make sure to take this important fact into account: many of the companies offering low interest consolidation programs are a total scam.
This is especially true many of the smaller, mom and pop type companies you’ve never heard of, but who will contact you offering to refinance and consolidate your loans at a low interest rate, no matter how poor your credit score might be.
Don’t Get Scammed!
The first rule in student loan consolidation is that if the offer sounds too good to be true, then it might be.
The simple fact is that if you have had trouble making your monthly payments, or if you’re already in default, then you will need to be especially careful about choosing a debt consolidation company, because you are the primary target of the scam artists.
Fortunately, the good news is that trusted lenders are available to consolidate your loans and help you save literally thousands of dollars each year.
My favorite company in the industry is the Private Student Loan Relief Helpline, which is a group of student loan servicers focused entirely on private debt (not Federal or Government loans). I like this company because they have ties to all of the major banks that operate in the industry and they can shop rates, compare offers, and find out exactly which program will save you the most money, and make it easiest for you to get out of debt quickly. You can reach the Private Student Loan Relief Helpline by calling: 1-866-530-9946.
While this company does charge a fee for their service, talking to them over the phone is free, and you should be able to get at least some basic information from their experts without having to spend any money. If you do choose to use them in the end, their average cost is not that high (a couple hundred dollars) and absolutely comparable to the rates you’d pay from other similar services, and I trust them to take good care of the people I send there. I have been working with this company for a long time and I would not direct visitors from my website anywhere else.
What is Student Loan Consolidation?
Consolidation is the process that allows you to combine multiple student loans into a brand new loan, with a new interest rate, new repayment schedule and new monthly payment.
The way it works is that the company who consolidates your loan pays off your old loans, then issues you a new one with entirely different terms.
Consolidation programs are extremely popular because they are typically available without up-front costs, and oftentimes offer significantly smaller monthly payments than existing loans.
Keep in mind though that some consolidation programs are better than others, and while some will save you some serious coin, others could end up costing you in the long run.
Why Consolidate Your Student Loan Debt?
There are four important reasons to consider consolidating your student loans, including:
- Consolidation Reduces Complexity – Combining all your loans makes managing them much easier. Instead of sending multiple monthly payments to a variety of different lenders, you’ll only need to make one payment to one lender.
- Consolidation Reduces Monthly Payments – Consolidating your loans almost always reduces your monthly payments. Would you like a couple hundred extra dollars a month to spend on things other than student loans? I know I would!
- Consolidation Reduces Interest Rates – Consolidated loans almost always come with lower interest rates. If you’ve got a better credit score or higher income than when you first borrowed, this is especially true.
- Consolidation Saves You Money – Consolidation can literally save you tens of thousands of dollars over the course of your loan. For many borrowers, it’s the best, fastest and easiest way to pay off student loan debt.
The most important part of the process is choosing the right lender.
Remember, this industry is chock-full of con artists and scammers, and you need to make sure that you’re working with a reputable company before you even begin to consider signing any paperwork.
Fortunately, I’ve got quite a bit of experience in this process, and after testing out many different lenders, I can say with complete honesty that my preferred company is the Private Student Loan Relief Helpline, who you can reach by calling 1-866-530-9946.
This company is staffed with absolute experts who are specifically trained to handle private student loan debt, and they will be able to determine the best path to reduce your debt as quickly and cheaply as possible. While you will need to pay them to provide the service, the phone call to them is free, so there is no downside to calling.
Should You Consolidate?
To be honest, that depends. Not everyone will save money by consolidating their loans.
However, if you meet any of the following eligibility criteria, then it’s probably worth consolidating your student debt:
- You’ve got multiple private student loans from the same lender, or different lenders
- You’re having trouble making monthly payments because they’re simply too high
- Your student loans were issued at a time when interest rates were higher than they are now (basically any time other than 2016, since interest rates are at a historic, all-time low!)
- Your loans came with a variable interest rate which is about to increase, or which already has increased
- Your credit score has improved since the time you originally borrowed the money
- You have a higher income than you did when you originally borrowed the money
- You weren’t able to get a cosigner for your original loans, but you can get one now
If any of the conditions above apply to your situation, then you could end up saving significant money by consolidation your debt.
Who Offers the Best Consolidation Rates?
That’s an easy one, and like I mentioned toward the beginning of this post, the biggest lenders typically offer the best rates.
The best way to figure out which bank will give you the best deal is to talk to all the banks individually and compare their offers, then go with the one that will save you the most money.
If you don’t have time to talk to them all, then your best option is to call one of the aggregator companies like the Private Student Loan Relief Helpline, who will check all the prevailing ranks from all lenders and get you signed up with the bank who offers the best option for you. Again, you can reach them by calling 1-866-530-9946.
Your choice of lender could save (or cost) you tens of thousands of dollars, so don’t be afraid to spend some time ensuring that you’re making the right decision!
Are There Disadvantages to Consolidation?
Yes, in certain circumstances there are definitely reasons not to consolidate.
Here are a couple of the drawbacks that will want to consider before deciding to consolidate:
- Consolidation Could Cost More – This really depends on your situation, but even though consolidating your debt decreases your monthly payments, you might end up owing more over the lifetime of the loan by extending the loans term (thus giving more time for interest to accumulate additional costs)
- Variable Interest Rates Could Backfire – Right now interest rates are near historic lows, making this one of the best times in history to consolidate debt, but if you consolidate with a variable interest rate, then you could end up paying more down the line when the interest rate increases.
- Consolidating Federal Loans with Private Loans is a Terrible Idea – While it is possible to consolidate your Federal loans with Private loans, that’s almost always a bad idea. First, it disqualifies you for Federal Student Loan Relief, including Forgiveness, all the different Repayment Plans, and even Forbearances and Deferrals.
How Do You Consolidate Your Loans?
This part’s easy. All you have to do is contact the banks themselves, or one of the aggregators who work with them.
They will walk you through the process, letting you know what financial information is required, what kind of package you qualify for, and what you could save by consolidating your debt today.
Be prepared for a bit of paperwork though, as the consolidation approvals process does require a credit check, employment check, lots of forms and a bit of work, but rest assured that your significantly lower monthly payments will be worth the trouble!
The most difficult part of the process is selecting the right lender, so don’t be afraid to spend some time and/or money on determining the lender that will work best for you.
Questions to Ask Consolidation Companies
To make sure you get the best deal possible, here are some things you’ll want to ask any company that you vet:
- Will my interest rate be fixed, or variable? If variable, what will it start at, and for how long will it remain fixed? Try to lock in a fixed-rate loan if you qualify, as interest rates are lower than they’ve ever been before, and are almost guaranteed to go up in the years ahead.
- Are there any origination fees for consolidating my loan? If there are, make sure that they aren’t too high, and shop them against the other lenders to see who’s offering the best deal. Up-front costs shouldn’t be thought of as a deal breaker, but they should be considered in your calculations.
- Will I face pre-payment penalties for paying off the loan early? If the consolidation company has pre-payment penalties, then you may want to look at other lenders. These can dramatically inflate the total cost of your student loans, and should be avoided if possible.
- Can I get a discount for enrolling in automatic payments? Not all companies offer this, but those that do often provide a slight interest rate decrease for enrolling in auto pay programs, making them more than worth the hassle.
- Can I get a discount for on-time payments? Not all companies offer this either, but some will provide interest rate drops or even loan forgiveness incentives for making a certain number of payments on time.
- Can I pay with my credit card without getting charged an additional fee? You probably don’t want to do this anyway, because credit card interest rates are typically higher than student loan interest rates, but it can be handy to have access to this option if you run into financial trouble down the line.
Confused about how to proceed? Want additional details not covered on this page?
Feel free to ask questions in the comments section below, and I’ll do my best to get you an answer quickly.
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In the interest of full disclosure, I want to point out that I’ve got affiliate agreements with some of the company’s mentioned on this page.
If you get loans funded from any of my affiliate partners, then I will receive a small commission for having referred you to them (about $100).
Every single lender on the Internet has an affiliate program like this, but I’ve chosen to work with ONLY the lenders that I feel offer the best rates and service to visitors of my site. I regularly update this page’s content and my preferred lenders to ensure that you’re getting the best deal.
Please note that I’m not allowing that to influence my judgement of their services. I’m being 100% honest in my evaluations of each lender.
If you have any questions about my agreements with the lenders, or if you have any other questions about the company’s themselves, please feel free to reach out to me with them in the comments section below.