7 Best Private Student Loan Consolidation Options in 2023
Are you struggling with multiple student loans? Do you want to simplify your payments and save money on interest? If so, you might benefit from private student loan consolidation.
Private student loan consolidation, also known as refinancing, is a process of combining your existing student loans into one new loan with a lower interest rate and a single monthly payment. This can help you reduce your debt faster and save thousands of dollars over the life of your loan.
However, not all private student loan consolidation options are created equal. There are many factors to consider when choosing a lender, such as the interest rate, the repayment term, the fees, the eligibility criteria, and the customer service. To help you make an informed decision, we have reviewed and ranked the 7 best private student loan consolidation options in 2021 based on these factors.
1. SoFi
SoFi is one of the most popular and reputable lenders in the private student loan consolidation market. They offer competitive interest rates, flexible repayment terms, no origination or prepayment fees, and various benefits for their members, such as career coaching, financial planning, and community events. SoFi also has a unique program called SoFi Select 100, which allows borrowers to invest in a diversified portfolio of stocks and ETFs while paying off their loans.
SoFi’s interest rates range from 2.25% to 6.39% for variable loans and from 2.99% to 6.99% for fixed loans. The repayment terms vary from 5 to 20 years. To qualify for SoFi, you need a credit score of at least 650 and a minimum income of $50,000. You can refinance up to $300,000 in student loans with SoFi.
2. Earnest
Earnest is another leading lender in the private student loan consolidation industry. They stand out for their flexible and customizable repayment options, which allow borrowers to choose their own monthly payment amount and adjust it anytime without fees. Earnest also offers biweekly payments, skip-a-payment feature, and rate reduction program for eligible borrowers.
Earnest’s interest rates range from 1.99% to 5.74% for variable loans and from 2.98% to 5.89% for fixed loans. The repayment terms vary from 5 to 20 years. To qualify for Earnest, you need a credit score of at least 650 and a minimum income of $35,000. You can refinance up to $500,000 in student loans with Earnest.
3. Laurel Road
Laurel Road is a division of KeyBank that specializes in private student loan consolidation for graduate and professional students. They offer low interest rates, no origination or prepayment fees, and a loyalty discount of 0.25% for existing KeyBank customers. Laurel Road also has a referral program that rewards borrowers with $400 for each friend they refer who refinances with them.
Laurel Road’s interest rates range from 1.89% to 5.90% for variable loans and from 2.80% to 6.00% for fixed loans. The repayment terms vary from 5 to 20 years. To qualify for Laurel Road, you need a credit score of at least 660 and a minimum income of $60,000. You can refinance up to $300,000 in student loans with Laurel Road.
4. CommonBond
CommonBond is a socially responsible lender that offers private student loan consolidation with competitive interest rates, no origination or prepayment fees, and a hybrid loan option that combines fixed and variable rates. CommonBond also has a social impact program that funds the education of a child in need for every loan they fund.
CommonBond’s interest rates range from 2.50% to 6.85% for variable loans, from 2.59% to 6.74% for fixed loans, and from 2.99% to 6.49% for hybrid loans. The repayment terms vary from 5 to 20 years for variable and fixed loans and from 10 years for hybrid loans. To qualify for CommonBond, you need a credit score of at least 660 and a minimum income of $65,000. You can refinance up to $500,000 in student loans with CommonBond.
5. LendKey
LendKey is an online platform that connects borrowers with community banks and credit unions that offer private student loan consolidation. They offer low interest rates, no origination or prepayment fees, and a cosigner release option after making 12 consecutive on-time payments. LendKey also has a customer loyalty program that rewards borrowers with $200 for each friend they refer who refinances with them.
LendKey’s interest rates range from 1.99% to 7.75% for variable loans and from 2.95% to 8.49% for fixed loans. The repayment terms vary from 5 to 20 years. To qualify for LendKey, you need a credit score of at least 660 and a minimum income of $24,000. You can refinance up to $300,000 in student loans with LendKey.
6. PenFed
PenFed is a federal credit union that offers private student loan consolidation with low interest rates, no origination or prepayment fees, and a rate match guarantee that promises to beat any competitor’s rate by 0.25%. PenFed also has a cosigner release option after making 12 consecutive on-time payments.
PenFed’s interest rates range from 2.15% to 5.05% for variable loans and from 2.99% to 5.15% for fixed loans. The repayment terms vary from 5 to 15 years. To qualify for PenFed, you need a credit score of at least 670 and a minimum income of $42,000. You can refinance up to $300,000 in student loans with PenFed.
7. ELFI
ELFI is a division of SouthEast Bank that offers private student loan consolidation with low interest rates, no origination or prepayment fees, and a personalized service that assigns each borrower a dedicated loan advisor. ELFI also has a referral program that rewards borrowers with $400 for each friend they refer who refinances with them.
ELFI’s interest rates range from 2.39% to 6.01% for variable loans and from 2.58% to 5.99% for fixed loans. The repayment terms vary from 5 to 20 years. To qualify for ELFI, you need a credit score of at least 680 and a minimum income of $35,000. You can refinance up to $250,000 in student loans with ELFI.
Private student loan consolidation can be a smart way to simplify your payments and save money on interest if you have good credit and stable income. However, it is not a one-size-fits-all solution and you should compare different lenders and options before making a decision.
To help you find the best private student loan consolidation option for your situation, you can use our free online tool that matches you with up to four lenders based on your preferences and eligibility. You can also check out our comprehensive guide on how to refinance your student loans for more information and tips.
The Global Demand for Student Loan Consolidation
Student loan consolidation is a process of combining multiple student loans into one new loan with a lower interest rate and a longer repayment term. This can help borrowers save money on interest, simplify their monthly payments and reduce their debt burden. According to a report by the Institute for College Access and Success, the average student debt in the U.S. was $32,731 in 2020, up from $28,950 in 2015. The total outstanding student debt in the U.S. reached $1.7 trillion in 2020, surpassing credit card and auto loan debt. With the rising cost of higher education and the economic impact of the COVID-19 pandemic, many borrowers are looking for ways to manage their student debt more effectively.
One of the options available to borrowers is student loan consolidation, which can be done through federal or private lenders. Federal student loan consolidation allows borrowers to combine their federal loans into one Direct Consolidation Loan with a fixed interest rate based on the weighted average of their existing loans. This can help borrowers qualify for certain repayment plans, forgiveness programs and interest rate discounts. However, federal consolidation does not lower the interest rate or reduce the principal balance of the loans.
Private student loan consolidation, also known as refinancing, allows borrowers to combine their federal and/or private loans into one new loan with a lower interest rate and a customized repayment term. This can help borrowers save money on interest over time, lower their monthly payments and pay off their debt faster. However, refinancing also means giving up the benefits and protections of federal loans, such as income-driven repayment plans, deferment and forbearance options, and loan forgiveness programs.
The global demand for student loan consolidation has increased in recent years, as more borrowers seek to take advantage of the low interest rates and competitive offers from private lenders. According to a report by Credible, a marketplace for student loan refinancing, the average interest rate for refinancing in 2020 was 4.23%, down from 4.86% in 2019. The report also found that the average monthly savings for refinancing borrowers was $253, and the average lifetime savings was $16,940.
Some of the best private lenders for student loan consolidation in 2020 were SoFi, Laurel Road, Earnest, Credible and Citizens Bank, according to various rankings by CNBC , Forbes , U.S. News and CNET . These lenders offer competitive interest rates, flexible repayment terms, no origination or prepayment fees, and various benefits such as unemployment protection, rate discounts and financial advising.
References:
https://files.consumerfinance.gov/f/201207_cfpb_Reports_Private-Student-Loans.pdf
https://www.cnbc.com/select/best-debt-consolidation-loans/
https://www.forbes.com/advisor/student-loans/best-private-student-loans/
https://money.usnews.com/loans/student-loans/student-loans-consolidation-refinancing
https://www.sofi.com/refinance-student-loan/
https://www.earnest.com/refinance-student-loans
https://www.laurelroad.com/refinance-student-loans/
https://www.commonbond.co/refinance-student-loans
