For your information, private student loan is also known as alternate loan where it is offered by the private financial institution like banks and credit unions. As you probably know, scholarships and federal student loans are not available for everybody. You might be one of the students who were force to take up several private student loans to support your university expenses. And now you have to service the loans and carry several loans on your shoulder.
How can you remedy the situation?
You can look into the possibility of consolidating your private student loans and when you are doing that, make sure you have a co-signer in mind. This is because some of the loan consolidating companies might need a co-signer to support your application and sometime both of you might need to go through a credit history check. So, be prepared for that.
Unlike federal student loan consolidation, private student loan consolidating institutions usually offer non-fixed interest rate for your consolidated loan. Now depend on the market rate, this can be good news or bad news to you.
Imagine the market rate is low, your interest rate will be low and you can then sleep well at night. But what if the market rate suddenly shoots up 2 folds next year? You will have to start looking for ways to trim your expenses and that is not something you can celebrate about.
If that is the case, you will have to talk to the loan agency to look for ways to minimize your repayment. Ask them about discount for on time payment. And if you still can't make the payment, you probably will have to ask for a deferment.
Another reason to go for private student loan consolidation is that you can combine your student loans with personal loans like credit card, car and even housing loans. It might seem like a good idea at first, but doing so is like wielding a double edge sword. You might be paying lower monthly payment, but as you extend your loan period, you are in fact paying more to service your loan.
If you really have no choice but to consolidate your student and personal loans, make sure that you look for ways to settle the loans as soon as possible. But before you do that, remember to ask the institutions whether they can write off your pre-payment penalty. You can save quite a lot of money when you can shorten the loan period.
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