Private student loan consolidation does not mean that you are having financial trouble and need lower monthly payments. For some people it is a matter of convenience, not wanting to juggle four or five different payments every month.
It is an easy way to keep things organized and make everything easier to follow. There is less confusion if you are making one payment rather than trying to remember which lender you paid and which one you still owe.
Lenders also offer a wide spectrum of discounts and incentives on private student loans when you consolidate. If you apply with a credit-worthy cosigner it can get you a lower interest rate.
Most lenders then allow you to remove the cosigner from the account after a certain number of consecutive on-time payments (usually 36 or 48). This way you can lock in a better interest rate than you might have gotten on your own with minimal responsibility on the part of the cosigner.
Some lenders for private student loan consolidation also offer interest only payments for the first 24 months, lowering your monthly payment even further for that period.
|Jennifer Mathes, Ph.D.|