Things You Should Know About Student Loan Debt Consolidation
The average American by the time he graduates or becomes a professional, and in the worst case scenario even if he doesn't graduate, accumulates a certain level of student loan debt. Whether they are federal loans or private student loans, the higher the educational achievement is the higher the level of student loan debt usually becomes.
That is the price students have to pay to make their dreams come true - to become a doctor, a nurse, a lawyer, or a Wall Street hotshot, student loan debt consolidation have been a major resource for so many years students spend in school. Usually, students have to pay off these multiple student loans the minute they finish school. Some however, have opted to pay for accrual of interest even when in school, and some have opted to defer payments until they get out of school.
No matter what the choice is, by the time an average American student finishes school, he is saddled with student loan debt. Not paying these student loans is not an option - defaulting on a federal student loan will get the government on your case with your salary and will not do any good to your credit report. As a rising hotshot, the last thing you need is to start off with a bad credit. If you are having difficulties making payments on your student loans, it might be the time to consider a student loan debt consolidation.
Before making that decision, there are several things you need to consider. When you consolidate, you actually have to consider some advantages and disadvantages. A student loan debt consolidation can significantly reduce your monthly payments because the debt is stretched out over longer payment terms. It would seem like you are making some savings from your monthly budget because of the additional money cut out from the required monthly payment.
Consolidation would also prevent you from defaulting on your student loans and ruining your credit. With monthly payments, it becomes easier for you to manage your credit and you get to save your credit report. But there is also the bad side to consolidating student loans, and knowing all these facts would help you make the wiser choice.
When you consolidate your student loan debts, always remember that many lenders actually offer a deferment plan to their borrowers in times of financial hardship. Federal student loans offer forbearance during financial difficulties. But if it is still not enough to get you back on your feet, then forbearance or deferment of payment may not help. Another thing to consider is the fact that once you apply for consolidation, you will get stuck with the interest rate you sign up with and you lose out on any borrower benefits provided by your lender.
Before opting for a student loan debt consolidation, carefully consider your options. Seeking financial advice from experienced credit counselors can be very helpful. Being honest to yourself would make the choice easier. Lastly, always opt for a plan that suits your financial situation.
วันศุกร์ที่ 20 มีนาคม พ.ศ. 2552
Paying For College With Student Loans And School Grants
Paying For College With Student Loans And School Grants
College is very expensive, and therefore many college students are forced to turn to student loans, financial aid and school grants to pay for their education. Student loans are available from a variety of sources. The most common place to go to look for student loans is the federal government.
The government offers both loans and grants to eligible college students. The first step towards applying for these federal programs is to complete the Free Application for Federal Student Aid (FAFSA). This application will determine whether or not your family's income qualifies you for federal aid. If you qualify for help, you will receive an award letter stating what options you have.
The federal government offers two main student loans for those who qualify. The Stafford Loan is one of these. In order to qualify for the Stafford Loan, you will first need to complete the FAFSA. If you are notified that you qualify, you must be enrolled at least part time in your school to apply for the loan. If your application is approved, you can borrow up to $46,000 with the Stafford Loan, with up to $23,000 of that subsidized by the government.
The other federal student loan program, the Perkins Loan, is designed for students with tremendous financial need. If you are notified after filing the FAFSA that you qualify for the Perkins Loan, you will work with your school to attain the loan. The school will actually be your lender, using funds that the government sent to them for this purpose.
If you do not qualify for these types of student loan programs, you can seek private student loans through any lender you wish. Your school may also offer a tuition payment plan that allows you to pay your tuition over time as you attend school. If you need more information about your student loan options, contact the financial aid office of your chosen school. The financial aid department at any college or university will help you determine if you qualify for any student loans that you may have overlooked in your search. Remember don't be afraid to ask for help if you need it.
College is very expensive, and therefore many college students are forced to turn to student loans, financial aid and school grants to pay for their education. Student loans are available from a variety of sources. The most common place to go to look for student loans is the federal government.
The government offers both loans and grants to eligible college students. The first step towards applying for these federal programs is to complete the Free Application for Federal Student Aid (FAFSA). This application will determine whether or not your family's income qualifies you for federal aid. If you qualify for help, you will receive an award letter stating what options you have.
The federal government offers two main student loans for those who qualify. The Stafford Loan is one of these. In order to qualify for the Stafford Loan, you will first need to complete the FAFSA. If you are notified that you qualify, you must be enrolled at least part time in your school to apply for the loan. If your application is approved, you can borrow up to $46,000 with the Stafford Loan, with up to $23,000 of that subsidized by the government.
The other federal student loan program, the Perkins Loan, is designed for students with tremendous financial need. If you are notified after filing the FAFSA that you qualify for the Perkins Loan, you will work with your school to attain the loan. The school will actually be your lender, using funds that the government sent to them for this purpose.
If you do not qualify for these types of student loan programs, you can seek private student loans through any lender you wish. Your school may also offer a tuition payment plan that allows you to pay your tuition over time as you attend school. If you need more information about your student loan options, contact the financial aid office of your chosen school. The financial aid department at any college or university will help you determine if you qualify for any student loans that you may have overlooked in your search. Remember don't be afraid to ask for help if you need it.
วันศุกร์ที่ 6 มีนาคม พ.ศ. 2552
In Today's Market Is A Private Loan Better Than A Federal One?
In Today's Market Is A Private Loan Better Than A Federal One?
At this time last year the prime rate, which is the benchmark widely used to determine the interest rate on a number of loans, was a respectable 6%. Today, that rate is a jaw dropping 3.25%, the lowest it's been since 1955. To put that in perspective Dwight Eisenhower was our President, a first class postage stamp cost 3 cents, and Marty McFly was desperately trying to get back to the future. I guess the more things change the more they stay the same. But how can you benefit from a low prime rate?
Many private student loans are tied to the prime rate index, and since the prime is at historic lows the cost of borrowing is significantly lower than it has been in years. This fact has parents and students debating whether they should take out a private or federal student loan. Undoubtedly your qualifications and priorities will serve as your guide when making this important decision, but there are some key factors and benefits to consider during your deliberation process.
Private loan benefits - No origination fees - Interest rate ranging from ½ point below prime to 4.75 points above prime - 2% cash reward on your outstanding principle balance at graduation - Payments deferred until after school
Federal loan benefits -Fixed interest rate with predictable monthly payment - Three years worth of deferment potential - Loan Forgiveness for qualified borrowers -Payments deferred until after school
Information provided by the Student Loan Network for general information purposes only.
As you can see, variable interest rates for private student loans start at 2.75% (because the prime is 3.25% and rates start 1/2 point below prime). However, the catch-22 for many Americans is that while this favorable rate exists it is not attainable.
Low interest rates are reserved for those with strong FICO scores, an endangered group which dwindles by the day. Millions of Americans have been defaulting on loans over the past 18-months sending their credit score into a damning abyss. A compromised credit score essentially disqualifies you from the most salutary interest rate in the market. And it's not just the borrowers with a scar on their credit history that are facing new hurdles; the pinch is being felt across the board. Those with stellar credit are adjusting to new requirements as well.
Most lenders, regardless of the individuals credit score, are requiring a co-signer on all applications to protect themselves. But finding two credit worthy applicants is a harrowing task in today's market, which makes federal loans the only realistic option for many desperate students.
Federal loans serve as a dynamite need-based option for those seeking funds for school. You don't need a co-signer, and eligible students can actually qualify for more funds if their parent or guardian has poor credit. To qualify for a federal loan you must complete a FAFSA, and must also attend a qualified Title IV school. That said, federal loans do have a few drawbacks.
First off, the maximum yearly allotment is relatively small in relation to the cost of tuition, and will most likely only cover a fraction of the tuition cost. Next, the interest rate is fixed and can not be decreased for the life of the loan. Third, some lenders charge a 1% origination fee off the topic. And lastly, many feel the current Stafford loan rates, which range from 6% to 6.8%, are outlandishly high in this market.
As you can see each loan type has its advantages and disadvantages. Just be sure to do your homework before you sign on the dotted line. If you do you'll be sure to ace your tests inside and outside of the classroom.
At this time last year the prime rate, which is the benchmark widely used to determine the interest rate on a number of loans, was a respectable 6%. Today, that rate is a jaw dropping 3.25%, the lowest it's been since 1955. To put that in perspective Dwight Eisenhower was our President, a first class postage stamp cost 3 cents, and Marty McFly was desperately trying to get back to the future. I guess the more things change the more they stay the same. But how can you benefit from a low prime rate?
Many private student loans are tied to the prime rate index, and since the prime is at historic lows the cost of borrowing is significantly lower than it has been in years. This fact has parents and students debating whether they should take out a private or federal student loan. Undoubtedly your qualifications and priorities will serve as your guide when making this important decision, but there are some key factors and benefits to consider during your deliberation process.
Private loan benefits - No origination fees - Interest rate ranging from ½ point below prime to 4.75 points above prime - 2% cash reward on your outstanding principle balance at graduation - Payments deferred until after school
Federal loan benefits -Fixed interest rate with predictable monthly payment - Three years worth of deferment potential - Loan Forgiveness for qualified borrowers -Payments deferred until after school
Information provided by the Student Loan Network for general information purposes only.
As you can see, variable interest rates for private student loans start at 2.75% (because the prime is 3.25% and rates start 1/2 point below prime). However, the catch-22 for many Americans is that while this favorable rate exists it is not attainable.
Low interest rates are reserved for those with strong FICO scores, an endangered group which dwindles by the day. Millions of Americans have been defaulting on loans over the past 18-months sending their credit score into a damning abyss. A compromised credit score essentially disqualifies you from the most salutary interest rate in the market. And it's not just the borrowers with a scar on their credit history that are facing new hurdles; the pinch is being felt across the board. Those with stellar credit are adjusting to new requirements as well.
Most lenders, regardless of the individuals credit score, are requiring a co-signer on all applications to protect themselves. But finding two credit worthy applicants is a harrowing task in today's market, which makes federal loans the only realistic option for many desperate students.
Federal loans serve as a dynamite need-based option for those seeking funds for school. You don't need a co-signer, and eligible students can actually qualify for more funds if their parent or guardian has poor credit. To qualify for a federal loan you must complete a FAFSA, and must also attend a qualified Title IV school. That said, federal loans do have a few drawbacks.
First off, the maximum yearly allotment is relatively small in relation to the cost of tuition, and will most likely only cover a fraction of the tuition cost. Next, the interest rate is fixed and can not be decreased for the life of the loan. Third, some lenders charge a 1% origination fee off the topic. And lastly, many feel the current Stafford loan rates, which range from 6% to 6.8%, are outlandishly high in this market.
As you can see each loan type has its advantages and disadvantages. Just be sure to do your homework before you sign on the dotted line. If you do you'll be sure to ace your tests inside and outside of the classroom.
Practical Tips To Repay Your Student Loan Debt
Practical Tips To Repay Your Student Loan Debt
It does not have to be a lifetime's struggle to repay one's student loan. In a study of students who graduated from 2000-2004, public school students have an average debt amount of almost $16,000 while private school students owe as much as $23,000. These large amounts will obviously pose a problem for fresh graduates who are just starting out in their work life. If it is not managed properly, student loan debts can derail the careers of graduates or impede their life plans such as getting married, buying their own home and starting a family.
The reality is that paying off student loan debt can take years. An average student with $20,000 loan at 6.125% will have to pay at least $243 a month until he or she reaches 37. You should work out a plan to repay your student plan as soon as possible. Note that the interest amount can work out to more than a hundred percent of the original loan amount if you drag the repayment period. As soon as your income permits, you should pay off more of your loan. Review your income and repayment plan regularly, especially if you have received promotion, salary increment or bonus. Always bear in mind you are in serious debt, you cannot afford to be complacent about debt repayment. Manage your finance carefully and avoid pitfalls like the availability of easy credit, which you may not be able to repay. Nobody will know whether other debts or emergencies requiring huge cash layout anytime on in life will hit them. It is best to be prepared. Be smart and prudent with money. Do not form the habit of lavish spending.
Tips on Reducing Student Loan Debt
The smart thing to do about student loan is to consolidate the loans if you have take up several student loans and to seek a lower interest rate. This is possible when the graduate have secured a better credit rating after joining the workforce. Even for a single loan amount, you should try to refinance the debt. This will spread out the debt over a longer period and lower the monthly payments. However, this option can cause the more in term or repayment amount over the life of the loan if not managed properly.
Relief for Students with Disabilities
The federal government is willing to discharge the federal loans of people with certain disabilities but this is only for disabilities, which render them unable to work for money indefinitely.
If you have a job but still find it hard to make the monthly repayments, you have the option of applying for an economic hardship deferment of forbearance. This will reduce or even suspend your monthly loan repayments. However, be mindful that the interest will continue to accumulate on the outstanding loans that are subsidized federally.
It does not have to be a lifetime's struggle to repay one's student loan. In a study of students who graduated from 2000-2004, public school students have an average debt amount of almost $16,000 while private school students owe as much as $23,000. These large amounts will obviously pose a problem for fresh graduates who are just starting out in their work life. If it is not managed properly, student loan debts can derail the careers of graduates or impede their life plans such as getting married, buying their own home and starting a family.
The reality is that paying off student loan debt can take years. An average student with $20,000 loan at 6.125% will have to pay at least $243 a month until he or she reaches 37. You should work out a plan to repay your student plan as soon as possible. Note that the interest amount can work out to more than a hundred percent of the original loan amount if you drag the repayment period. As soon as your income permits, you should pay off more of your loan. Review your income and repayment plan regularly, especially if you have received promotion, salary increment or bonus. Always bear in mind you are in serious debt, you cannot afford to be complacent about debt repayment. Manage your finance carefully and avoid pitfalls like the availability of easy credit, which you may not be able to repay. Nobody will know whether other debts or emergencies requiring huge cash layout anytime on in life will hit them. It is best to be prepared. Be smart and prudent with money. Do not form the habit of lavish spending.
Tips on Reducing Student Loan Debt
The smart thing to do about student loan is to consolidate the loans if you have take up several student loans and to seek a lower interest rate. This is possible when the graduate have secured a better credit rating after joining the workforce. Even for a single loan amount, you should try to refinance the debt. This will spread out the debt over a longer period and lower the monthly payments. However, this option can cause the more in term or repayment amount over the life of the loan if not managed properly.
Relief for Students with Disabilities
The federal government is willing to discharge the federal loans of people with certain disabilities but this is only for disabilities, which render them unable to work for money indefinitely.
If you have a job but still find it hard to make the monthly repayments, you have the option of applying for an economic hardship deferment of forbearance. This will reduce or even suspend your monthly loan repayments. However, be mindful that the interest will continue to accumulate on the outstanding loans that are subsidized federally.
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