Who's Consolidating Private Student Loans?

Several participants in the SLA webinar today asked this specific question so I thought I would do a bit of research to answer it.  With private loans, the benefits to consolidation come in seeking to get a lower interest rate on your loans (from a higher credit score perhaps) as well as combining several loans into one monthly payment.  Some consolidation lenders also allow the borrower to extend the repayment period (e.g., from 15 to 25 years) thereby lowering the monthly payment while also increasing the total cost of the loan given the longer term. 

Here are the two options that I came across in my midnight research (please share with me any options that you are aware of):

• Wells Fargo Private Consolidation Loan
  • From $5,000 to $100,000
  • Consolidate private loans from Wells Fargo or other lenders
  • Starting interest rates vary from 5.75% to 12.75%
  • Only lender partner listed on Simple Tuition site
  • Here is some additional detail:

• Wells Fargo Private ConsolidationSM Loan

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  The monthly payment amount examples are based on a $40,000 loan with a 25-year repayment term and the identified in-repayment APR. The Prime Rate (as published in the Wall Street Journal) may change monthly on the first day of each month, subject to a contractual minimum of 4.75% (the Variable Floor Rate). All payments are subject to a $50 monthly minimum.
  
  
  Repayment Example:
  

  Tier	Index1 Plus	APR	Monthly Payment
  1	1.00%	5.75%	$251.64
  2	2.75%	7.50%	$295.60
  3	3.75%	8.50%	$322.09
  4	5.75%	10.50%	$377.67
  5	7.75%	12.50%	$436.14
  6	9.50%	14.25%	$489.1

The Index is equal to the Prime Rate. If the Prime Rate changes, it will change monthly on the first day of each month. However, the Index is subject to a contractual minimum of 4.75% (the Variable Floor Rate).

• Chase Private Loan Consolidation
  • Loan amounts of $7,500 to $150,000
  • Starting Interest rates from 6.56% to 11.56%
  • 20-30 year repayment depending on loan amount
  • FAQ available here

Here were some other sites that I investigated:

• Sallie Mae had this message on their website:

Thank you for your interest in Sallie Mae, the nation's leading provider of saving- and paying-for-college programs. We have temporarily suspended offering our private consolidation loan program. No new private consolidation loan requests will be processed at this time.

• Another site that I came across, Studentloanconsolidator.com, took my contact information and referred me to the social lending site, Lending Club.  

• On NextStudent's Private Student Loan Consolidation webpage was this familiar message:

* Please be aware that due to current conditions in the student loan market in particular and in the financial sector in general, NextStudent is not currently able to accept any new applications for our private consolidation loans.

So, I guess the short answer is that among traditional lenders, Chase and Wells Fargo are the only lenders currently providing a consolidated private loan solution. 

Comments

[Ron Tough]

Thank you Education Finance Partners: In Nov 2006 I consolidated $63,000 in Auntie Sallie private loans into one $63,000 EFP loan - 3-month LIBOR + 2.35% minus .25% auto-debt reduction = 3.33% today. July 1 I get another reset and my rate will be 2.76% or lower.....

This is a deal that cannot be beat....I have reduced my balance from $63,000 to $27,000 today and I should have this loan paid off by next year at this time.

Unfortunately EFP went BK last year and they aren't offering any more consolidations. Everybody else going forward is stuck paying usurious rates detailed above.

Now if the Messiah could do something about my $102,000 in federal loans at 3.5% ....

[Claire]

I was looking to consolidate my student loans and came across this post, very helpful. One thing i learned about consolidating student loans when i was looking around the net, is that you do not want to consolidate private student loans with federal student loans (http://studentloansforcollege.org/studentloans/consolidate-private-student-loans/) this was something i was not aware of, so hopefully this helps someone else. thanks for you guys having blogs like this out there for students.