August 3, 2021

How To Consolidate Private Student Loans

Chipper Help

We call private student loan consolidation refinancing. This process generally involves getting a new, single loan to pay off multiple private student loans. You may consider this option if you’re in a better financial situation with a higher credit score than when you first took out your private student loans.

When you get a new loan to pay off your existing private student loans, your new lender will factor your latest financial history, current income, job history, educational background, and credit score into your new policy. So, you are more likely to have lower interest rates on your new loan if you are better positioned to get a loan.

If you doubt you’re in a better position to get a new loan, you may still access better rates if you have access to a cosigner who has a stable job and excellent credit (typically around the 690 range and higher) when getting a new loan. Some institutions require cosigners for refinancing to ensure you are capable of repayment. As such, the refinancing terms and conditions vary per private lender.

Private Student Loan Refinancing Lender Rates

You may want to choose a private refinancing lender based on their annual percentage rate (APR) or the figure representing a loan’s yearly interest rate. Here is a list of the current rates of private institutions that offer refinancing options:

Private Refinancing LenderAnnual Percentage Rate
 Fixed-Rate RangeVariable Rate Range
PenFed Credit Union2.89% - 5.63%2.13% - 5.25%
LendKey2.95% - 7.63%1.9% - 5.25%
Earnest2.5% - 5.79%1.88% - 5.64%
CommonBond2.98% - 5.79%1.99% - 5.61%
Education Loan Finance2.58% - 5.99%2.39% - 6.01%
LaurelRoad2.5% - 6%1.89% - 5.9%
SoFi2.74% - 6.94%2.25% - 6.59%
Citizens One2.69% - 9.15%2.24% - 8.9%

We sorted the above private refinancing lenders based on the highest maximum APR for fixed interest rates. Fixed rates are interest rates that remain the same throughout a loan’s lifetime. Meanwhile, variable rates fluctuate through time. Regardless of the kind of rate your new loan has, you still obtain a single monthly payment when you refinance your student loans.

Get a Home Equity Loan to Refinance Private Education Loans

If you have multiple private student loans with variable rates, you can get a home equity loan with a fixed rate to refinance your private education loans. By getting a fixed rate home equity loan, you will lock in your interest rate that may have changed if you left your variable rate student loans separate. Home equity loan interest rates are typically within the same range as private education loans, making them compatible for refinancing.

Conclusion: How To Consolidate Private Student Loans

Private student loan consolidation, or refinancing, is essentially about getting a new loan to pay off your existing multiple private student loans. By doing so, you will get a new policy and make single monthly payments instead of several payments across multiple loans.

You can get a new policy from private refinancing lenders that offer refinancing options for private education loans. You may also refinance your student loans by getting a home equity loan, which tends to have similar interest rates to education loans.

Since you’ll be getting a new loan, you must consider your current financial and credit situation before refinancing. A better credit score will help you access lower interest rates. At the same time, you may get a cosigner to help you secure your loan.

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