Private Student Loan Consolidation Companies: Our Top Solutions

The Top 5 Private Student Loan Consolidation Companies

Looking for private student loan consolidation companies to merge your student loans, but don’t know where to start?

Student loan debt causes a lot of financial strain for Americans with loans topping $1.4 trillion through the end of 2016.

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With so many borrowers looking for relief, how can one go about making their payments more manageable?

Below we will outline some basic steps to consider when considering private student loan consolidation companies.

What is Debt Consolidation

Debt consolidation is a term that often gets misunderstood.

The main goal of debt consolidation is to combine multiple debts into one. As a result, this can help you achieve lower payments, better loan terms or both.

One situation where someone would use debt consolidation programs because they are unable to make minimum debt payments.

Also, if a person does not qualify for a balance transfer to reallocate their debt, then one of the private student loan consolidation companies can become necessary.

Ways to Evaluate Private Student Loan Consolidation Companies

Regardless of the situation, below we’ve outlined a few things to consider before signing up with a company that handles debt consolidation.

  • Confirm what you are getting. Make sure the company does, in fact, offer loan consolidation as many just offer credit counseling or debt settlement or management
  • Length of the loan consolidation. Bear in mind if the repayment terms extend longer than your existing loan, you could end up paying more debt in the long-term
  • Interest rate. You want the lowest rate possible and one that is lowest than what you’re currently paying
  • Fees. There will probably be an origination fee, so make sure you do the math before you consolidate
  • Reviews. Above all, check out other reviews online for private student loan consolidation companies

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Debt Consolidation Loan Rates: Choosing Between Variable and Fixed-rate Loans

A fixed-rate interest rate will stay the same throughout the life of the loan. Some exceptions can be written for things like penalties and discounts.

Variable rates will fluctuate, and change over time due to economic conditions.

Some drawbacks and advantages of fixed-rate loans:

  • Security. Peace of mind so you know that the interest rate will stay the same
  • Budgeting. You will know ahead of time how much interest you will be paying over the life of the loan
  • Refinance. The loan consolidation can be refinanced should a better interest rate be found

Some drawbacks of variable rate loans:

  • Can be risky. Variable rates can be cheaper to start out with but if the rate increases over time it will end up costing you more
  • Can be unstable. Sometimes rate changes can happen monthly, quarterly or annually depending on what happens with the economy

Note that variable interest rates usually have a “rate cap” which can guarantee that the rate doesn’t rise past a certain point.

To understand the impact of variable versus fixed rates, use a debt consolidation calculator to get a feel for what your total savings might be.

A good source to find out more about financial terminology and how to manage credit can be found at creditsquared.com

Company #1: CommonBond

The first private student loan consolidation company we will profile is CommonBond. This company was started in 2011 by three Wharton MBA graduates and offers undergraduate and graduate school loans.

CommonBond partners with Pencils of Promise which is an education nonprofit that helps fund children in the developing world each time it funds a new loan in the U.S.

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Best features:

  • Allows borrowers to release a co-signor and for children to refinance a parent PLUS loan into their name
  • CommonBond matches federal loan deferment periods if you graduated in the same year you applied
  • Academic deferment if you back to school
  • Loan forbearance allows you to temporarily stop making payments if you lose your job

Note that CommonBond doesn’t refinance student loans for people that reside in Idaho, Louisiana, Mississippi, Nevada, South Dakota or Vermont.

Company #2: SoFi

SoFi is one of the largest private student loan consolidation companies. In fact, they allow you to refinance both federal and private student loans into a single loan.

Best features:

  • Low-interest rates with no predetermined maximum loan amount
  • When you refinance with SoFi you become a member which makes you eligible for additional services ranging from a career coach to a financial advisor
  • Offers loan forbearance for up to three months if you lose your job

SoFI tends to prefer borrowers with good creditworthiness and strong income to qualify for the very best rates. As with most lenders, using a co-signer with SoFi will tie them to the loan until it is paid off.

Company #3: LendKey

LendKey isn’t a traditional lender, instead, it offers a network of hundreds of banks and credit unions that you can refinance with. For example, they will streamline the application process, including offering customer support to its applicants.

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Best features:

  • Save time with not having to individually research banks
  • You tend to receive good terms since you are ultimately receiving the loan consolidation from a small bank or credit union

Note you may need to join a credit union if you want to refinance through them.

Company #4: Earnest

Earnest takes a nontraditional approach to underwriting loans and factors in your money management skills with your account.

Best features:

  • Earnest will look at credit history but also considers merit-based factors, like your job and career prospects
  • Options for repayment such as the ability to make multiple payments per month or the ability to skip occasional payments without a penalty

Earnest does not allow applicants to apply with a co-signer.

Company #5: Citizens Bank

Citizens Bank is more of a traditional option that refinances both federal and private loans through its Education Refinance Loan program.

Moreover, the rates offered are usually competitive with the nontraditional private student loan consolidation companies found online.

Best features:

  • A low minimum income requirement of $24,000 annually
  • If applying with a co-signer, you can use the combined income when you apply
  • Offers a .25 percent autopay discount
  • Will work with loans for students that didn’t graduate

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Time to Consolidate Your Loan

By now you should have a good overview of some of the options available to you via the major private student loan consolidation companies.

Time literally is money when it comes to loans, so the time is now to take action and find a company that can service your student loan consolidation needs.

Check out creditsquared.com for all the info you’ll need to start the process of loan consolidation.

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4 Comments

  1. Thank you for the great information! I had consolidated some of the student loans awhile back. The funny thing is the company (AES – American Education Services) contacted me while I was still in school! I had no idea about it at all, but I took a look at it and decided to go for it. So I have two consolidated loans (subsidized and unsubsidized) and many unconsolidated loans (!), and private loans (as I took the Master’s Degree).

    I was very scared about consolidating loans, as I had never heard the company before, but I don’t have any problem with them. They lowered 0.75% interest rate after I faithfully paid the loans for a year or so.

    Another good thing is that other student loans (not consolidated ones and private loans) have been changing the lenders left and right. I think I went through at least three different lenders. AES has stayed the same.

    That’s my experience. But in all honesty, we shouldn’t take on too much student loan debt. It is very painful when you get out of the school and are already in debt.

    I used to work during school and saw many students took the loans to live on (getting the refunds) and suffered later that they had too much student loans.

    • Great comments about your experience.

      It appears to me you did all the right things after you graduated. You might take a second look at some of the private loan companies that can help you consolidate your other loans like Commonbond and SoFi. Doing so, could save you even more money.  There is nothing more frustrating than having your student loan Servicer change all the time.

      While you are doing that, make sure that you are dealing with a legitimate loan consolidation company. Check out reviews and do some deeper research before you deal with just any company.  In addition, if you are going to consolidate make sure you don’t overextend the term (try to shorten it) and make sure that you get the best rate possible.

      All the best. 

  2. Hi Patrick,

    Thanks for this post!

    I have about 30K in student loans and I’m looking to refinance. I was looking at SoFi but there were a couple you listed that I didn’t know about.

    I’m definitely going to check these out. CommonBond sounds interesting but I’m a little skeptical since they only been around since 2011.

    Would you recommend one over the others?

    • Great idea to refinance your student loans.  You will save a lot of money consolidating them.

      I would go with SoFi as they are the most well known and are geared toward this type of lending.  Having said that you should definitely do your research and shop around.  A 25 basis point difference in rate can save you thousands.

      I think the only risk with lenders that haven’t been around very long is their customer service after your loan is consolidated.  A bad loan servicer could turn out to be a nightmare.

      Check out what others are saying online about their customer relations.  It could turn out to be the best thing you have ever did.

      Best of luck.

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