Consolidating Private Student Loans

by Anita Vasquez

Every graduating college senior with any educational debt should know that consolidating their student loans is going to be one of the most important things they do after they leave school. No matter how small your student loans are you’ll find a major difference in your total repayment amount if you use a consolidation program to lower your long term interest rate even a couple of percentage points.

What many college seniors may not know is that there’s a big difference between consolidating private student loans and consolidating federal student loans. With federal student loans you’re guaranteed certain benefits by law – things like a fixed and unchanging interest rate, no fees, and an automatic rate reduction if you complete your consolidation during the six month grace period that starts when your full-time student status ends. Private student loans don’t carry any of these guarantees, and that makes them less appealing, which means they’ll have to work harder to convince you to give them your business.

Unfortunately, some private student loan consolidation companies resort to less than ethical marketing practices to get you to hurry up and complete their process. Here are some things to watch out for:

  • direct mail pieces and/or websites that use very official looking seals and logos in an attempt to look like an official branch of the government
  • gift cards or other bonus incentives designed to entice you to work with a company without having first checked out their credentials and without fully assessing the quality of their consolidation loans
  • telemarketers or direct mail pieces that ask for personal information such as your student ID, your social security number, etc in order to ‘pre-qualify’ you. Never give out any such information without knowing very well the trustworthiness of the company you’re communicating with.

There are plenty of legitimate and credible business out there who can help you consolidate private student loans, but you need to be willing to go through a couple of months of due diligence to make sure you’re working with the best one for you. Investigate them thoroughly, and don’t forget to use resources like the Better Business Bureau, and the Consumer Protection Agency in your research.

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