Optimizing Graduate Private Loans with Fixed Rate Options

Graduate private loans are designed to provide better borrowing options for graduate students than federal graduate loans, such as the Graduate Stafford and Grad PLUS programs. These options offer competitive rates that can be lower than the federal graduate loan rates or borrowing from a credit card. This can be very useful for those graduate students attending medical or law school where costs can exceed $100,000 over the 3-year graduate study period.

Using fixed rate options will allow you to lock in an interest rate and take advantage of low interest rates. This will lower your costs and make your monthly payments manageable when you begin to repay the loan. There are several options that you can use to optimize your graduate private loan and lock in a fixed rate option.

Option #1: Refinance Your Outstanding Graduate Private Loan

Refinancing your outstanding graduate private loan is the easiest way to lock in a lower fixed interest rate. A previous private graduate loan that was financed at 10 percent costs $100 on every $1,000 borrowed. Being able to refinance the loan at 6 percent brings your cost down $40 per $1,000 borrowed and lowers your interest cost over time.

You should check with various lenders that are offering refinancing options to determine your eligibility and see if your qualify for a reduced fixed rate loan option for your private graduate loan. Taking this step will allow you to realize real savings and lower your cost.

Option #2: Consolidate Your Loans

Loan consolidation of your outstanding student loan debt, both graduate and undergraduate, helps you streamline your payments and reduce your interest costs. Bringing your loans into 1 payment reduces the administrative fees and loan costs associated with maintaining several loans. This will help you as you take different loans with varying rates of interest and consolidate them into 1 loan with a lower fixed interest rate.

Option #3: Take Out a Private Loan to Payoff an Existing Loan


You can apply for a private loan at a lower interest rate and use the proceeds to pay off your outstanding private graduate school loans. This will allow you to retire your outstanding loans and wipe the slate clean with your school debt, leaving you with a lower fixed interest rate consumer loan to pay.

You will need to work with your bank or a lender that is willing to take the time to structure this type of loan. The selling point for you is that as a graduate student, you are in position to command a higher income that those individuals with only a bachelor's degree. This may persuade the lender to make the loan to you based on the future business relationship they may wish to establish with you for other bank products and loans.

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