How to Consolidate Alternative Student Loans

Alternative student loans, also known as private student loans, are designed to help students pay for any tuition, fees and living expenses remaining after federal aid is dispersed. Alternative student loans are credit based, meaning applicants must have sufficient credit in order to qualify. In addition, alternative student loans generally have higher interest rates than federal student loans.

Alternative student loans must be repaid, just like federal financial aid. If you have several alternative loans, it's wise to consolidate those loans into a single loan. By consolidating, you simplify your student loan payments; in addition, you can qualify for a lower interest rate if your credit score is higher than it was when you applied for those loans.

Instructions

1

Collect all of the information on your alternative student loans. Your lenders should be sending your periodic statements while you are in school. After you graduate or drop below half-time status, your lenders will send you repayment information on your loans. If you kept those statements and repayment information, use those to determine who your lenders are and how much you owe.

If you don't have that information, look on your credit report to find your balances and lender contact information. These student loans are credit-based and are reported to credit bureaus just like credit cards and other types of loans. Your school's financial aid office should also have the information if you cannot locate it anywhere else.

2

Contact your lenders and compare their private student loan consolidation programs. Lenders will have different options when it comes to consolidating alternative loans and shopping around will help you find the lender with the best interest rate and repayment terms.

3

Apply for an alternative loan consolidation. Applying for your consolidation loan soon after making your decision allows you to take advantage of its benefits quickly. The lender will take care of the actual consolidation process. All you have to do is provide your lender information and loan amounts.

4

Make each consolidated loan payment on time. Many alternative consolidation loans offer an interest rate reduction after your make a certain number of payments on time. Missing even one payment may disqualify you for this reduction, and your credit might take a hit if your lender reports this information on your credit reports.