Student Loan Consolidation » Grace Period

Student Loans for College – 10 Things You Should Know About Student Loans

admin — Sun, 27 Jun 2010 19:57:11 +0000

Student loans mean a lot for college students because their future depends on the money that will be given to them. Going to college is getting more and more expensive every school year which is why student loans are important to students and parents as well. So, if you are thinking about college or student loans in particular, here are some tips and guidelines that would put your college life in perspective.

1. Collect figures

Collect figures mean that you should now look at how much money is needed in order to pay for your education. This means that you should have at least an idea how much is the cost of the tuition and fees of your desired course. Aside from that, you should be able to have an estimate of other expenses like travel costs, college text books, room and board, college tuition, personal expenses, and other things.

2. Research about student loans

If you already have the information mentioned above, then the next step to take is to look for a student loan that is right for you. All student loans are not the same because not all payment plans are suitable for all. Gather as much information as you can so that you can choose from the options available for you.

3. Types of student loan

There are five types of loans available for student expenses: subsidized (based on financial need, and the government will subsidize the interest charges until education is completed), unsubsidized (no financial need, interest accrual starts immediately), direct PLUS loans (Parent Loan to Undergraduate Student), private loans, and home equity loans.

4. Differentiate and compare student loans

Each of the student loans is at least slightly different. Compare and contrast the types of student loans so that you can narrow down your decision process. They are different in terms of payment terms, grace period, or penalties.

5. Financial Need Student Loans

This type of student loan has a low interest rate and is from the federal government for students with financial need. The interest rate in this type of loan doesn’t begin until the student has begun repayment of the amount thus making it easier and cheap if compared with other student loans.

6. Non-Financial Need Student Loans

This is quite similar to the financial need student loan, the only difference is that it is not based on the financial need of the family and the interest rate starts while the student is still in school.

7. Federal PLUS (Parent Loan for Undergraduate Students)

This type of student loan is not based on the financial needs of the student. The parents of the child could apply for this type of student loan. It also doesn’t consider the family’s income or asset when applying for a student loan. The amount of eligibility is based on the educational expense minus other loans, grants and scholarships t he student qualifies for.

8. Private Loans

The ones that are offering this type of loans are usually companies, banks, and financial institutions. These firms provide private student loans for both undergraduate and graduate students. The interest rates in this type of loan are actually high so it is not really recommended for students to choose this type of loan.

9. Home Equity Loans and Lines Of Credit

In this type of student loan, a home equity loan or line of credit is the way homeowners pay for your college education. One possible advantage here is a tax deductible interest.

10. Choose and manage well

From the different types of student loans mentioned above, choose one or more that is suitable for your needs and your budget. Be sure that once you have chosen the type of student loan that you like, you could actually manage it well and handle the problems that comes along the way.

Student loans were made for two reasons. One is to help the student financially in their quest for higher education, and the other reason is to help them be mature individuals. By having student loans, a student is able to face responsibilities which are really essential once that they step beyond their learning years into everyday life.

Remember though that these loans do eventually have to be paid back, after graduation if not sooner.

By: Dennis Becker

Subsidized Vs Unsubsidized – Making Student Loans Simpler

admin — Fri, 25 Jun 2010 01:31:03 +0000

Before beginning the process of acquiring financial aid, it is important to understand a few essential facts, especially when it comes to student loans. This is particularly important because more and more potential college student have to rely on so many student loans these days. To begin with, it is vital to understand the two primary kinds of student loans. There are subsidized loans and unsubsidized student loans. The two types of loans are somewhat similar, but the differences between them are key. Understanding those differences is crucial when it comes to putting together a financial aid package.

To begin with, an individual student’s need for financial aid is what determines the amount of a subsidized loan. Some common subsidized loans are the Subsidized Stafford Loan and the Perkins Loan. Succinctly, a subsidized student loan does not make students pay interest while they are enrolled in college. Instead, the federal government takes care of the interest while the student is in school. This is, in fact, why they are called “subsidized loans” – while a student is in school, the government subsidizes his or her interest for the duration. Following a student’s graduation, there is a grace period, and after that, the student must begin paying back both the loan(s) and the interest.

Conversely, unsubsidized loans stipulate that a student must pay back the loan’s interest while he or she is attending college. That is, of course, why they are referred to as unsubsidized loans – the federal government does not subsidize any of the balance for the student. As with subsidized loans, students have a grace period immediately following their graduation from college. The main difference between subsidized loans and unsubsidized loans here is that all of the financial responsibility is solely left up to the student.

Another key difference between subsidized loans and unsubsidized loans exists in the amount a student is allowed to borrow each year. As aforementioned subsidized loans depend on an individual students need for financial aid and financial status. As such, there may be a limit to how much a subsidized loan allows any single individual.

While unsubsidized loans may also limit the amount given to any one student, their limitations are usually far lower than those for subsidized loans. In general, unsubsidized loans allow students to borrow as much as five thousand dollars more than subsidized loans offer.

In most cases, a student must be enrolled in college on a part-time basis, at least, in order to receive either a subsidized loan or an unsubsidized loan. If a student with a subsidized loan finds that he or she needs more money, he or she can certainly turn to an unsubsidized loan instead. However, that is not the only other option at all – there are many types of student aid available; these are just two of the most common kinds. There are also a variety of grants, scholarships, and private loans available if a student’s subsidized or unsubsidized loan does not meet all of his or her financial aid requirements.

By: Gary Marjani

Why Should I Consolidate My Student Loan?

admin — Sun, 13 Jun 2010 16:17:58 +0000

College loans are used to pay for assorted college related expenses; they’re usually offered as interest-deferred until the student leaves school. From the perspective of a lender, a college loan is a sound investment; most college students more than triple their immediate annual income after graduation, and this makes lending large sums (tens of thousands) of dollars very easy and sensible to do.

Most college loans have a grace period; during the first six months after leaving college, the loan doesn’t require payment, and isn’t accumulating interest – this window is meant to let the new college graduate find a job and settle in to their career, cover moving expenses and the like, before the clock starts ticking on their loan.

Unfortunately, the job market for new college graduates doesn’t always guarantee a lucrative starting career. Even with a good degree most students have to get an entry level position. Also, around that time in life, graduates are often getting married or having kids. These factors can turn a student loan into a nightmare of debt, as they juggle payments from multiple lenders and try to live within their means as other expenses accrue. Fortunately, there’s a way out. College loan consolidation lets you borrow a lump sum of money from another lender to pay off all your student loans. In return, you get a lower interest rate over a longer term; your monthly bills drop considerably; the monthly savings can be used to cover the bevy of new expenses you’ve got as you work your way into your professional life.

College loan consolidation programs in the United States come in two varieties – private and Federal. Federal student loan consolidation can happen if you have outstanding federal student loans that total more than ten thousand dollars, and are finished with school. If you do not fulfill these requirements, you must use a private lender.

Private lenders will look at your credit history and determine your monthly payments and interest rate. As with any private loan, it’s worth it to shop around, for lower monthly payments or better terms. It also makes sense to watch interest rates – if interest rates are low, consolidate your loans now before they rise again.

By: Nicholas Hurd

Student Loan Debt – Ways to Reduce It

admin — Fri, 11 Jun 2010 02:47:09 +0000

Every year that passes, student debt just keeps on increasing. Many blame it on the high costs of College and Graduate schools. Recent studies by the National Center for Education Statistics say that 50% of college graduates have availed of student loans with a $10,000 average for every student. There is a wide array of financial aid options available to students which range from grants, scholarships, federal loans as well as private student loans. Most of which can be easily obtained by a student who qualifies and passes all the requirements. The great thing about these loans is the fact that you are not required to pay them till you graduate or stop going to school.

So once you’ve finished school and graduated, you have to start paying back the debt. Some companies would offer a 3-5 month grace period allowing you to first get a job or something so you could pay them off. But of course, getting a job isn’t that easy and just like any other fresh graduate would have to start at the bottom with very low pay. So how do you pay your student loan? Or at least decrease it so it would be easier to pay off. There are many different ways to do it but the most common ones are; consolidation and refinancing.

Consolidating your loan would benefit you by reducing the interest rates that you have to pay as well as your monthly payments. Secondly, you also reduce the number of your creditors. Making it easier for you to keep track of the payments you have to pay. You no longer have to worry about missing out on a payment just because you forgot or got it mixed up with the others. To a fresh graduate busy with looking for a job, this would offer some relief. Many fresh graduates make full utilization of their grace periods before they start paying. Do the same, get some part-time work, sell stuff, do little things here and there that would help you get a good head start before you start actual work and begin paying off what you owe.

But take note that you cannot consolidate your student credit card debt with your student loan as this two are very different from each other. But you can, however, consolidate your credit card debt through private agencies and then, possibly, consolidate your student loan debt into the same loan. Remember that federal funded loans have lower interest rates when compared private so if you consolidate them into one you would have to pay a higher interest rate. So the best thing to do is to just separate them. But of course, you can’t just decide these things on your own even if you will have the last word. To get a better picture of the pros and cons, talk to a professional with expertise on the subject. They would be able to help you out and suggest the best possible ways to reduce your debt.

By: Domingo Reyes

Need Help Paying Back Student Loans?

admin — Sat, 05 Jun 2010 13:31:33 +0000

Many college students and graduates are looking for a solution for their student loan debt. While borrowers may be having difficulty paying back student loans, there is help. Solutions for paying back student loans are available.

What causes difficulty in paying back student loans?

New college graduates may find that it takes them longer to find a job than they expected. While there’s a six month grace period from the time students graduate until repayment begins, sometimes it takes six months or longer to find a job.

Many recent graduates who are employed are underemployed — working part-time or temporary jobs until they find a permanent position. During this time they may need help in making loan payments.

New college graduates can use several strategies to help with student loan repayment. Taking on additional part-time jobs or freelancing may be an option.

It is also wise to keep living expenses low the first few years out of college. Graduates can live with a roommate, or downsize into a smaller apartment. If new graduates are still looking for a job, it may be a good idea not to move until permanent employment is found. Then it will be easier to move to an area closer to the job.

Applying for a forbearance may be an immediate solution for times of difficulty making loan payments. A forbearance is temporary period of suspension of payments on a federal or direct loan after repayment has begun, and if the student does not qualify for deferment.

This means that if a student has already started paying back loans, they can apply for a suspension of payments on the grounds of financial hardship. A forbearance must be applied for through the lender. Being able to hold off payments for a few months can be a big help during a time of financial hardship.

Another student loan debt solution is to consolidate payments. Unless consolidated, each student loan is accounted for and paid separately. When a student graduates they will receive paperwork and payment slips for each loan. 2, 5, 12… no matter how many loans were taken out, they will be billed separately. Adding up all of these individual loan payments could total $300-$1000 per month or more! Not many students can afford such payments.

That’s where consolidation comes in. Consolidation is a process that combines all of the student loans into one loan. Borrowers can dramatically reduce monthly payments of student loans by consolidating. Average monthly payments could be less than $100 to around $250 per month. This is just an estimate. The monthly payment depends on the total amount borrowed, the interest rate and the way that loans are consolidated.

Consolidating through The Income Contingent Repayment plan is designed to help make repaying student loans easier for students who intend to pursue jobs with lower salaries, such as careers in public service. The monthly payment amount is adjusted annually, based on changes in family size and annual income. This program is only available through the US Department of Education, not a lender or bank.

Finally, the Graduated Repayment Plan starts the payments at a low level (usually interest only) and gradually increases the payments until the balance is paid. This is helpful for graduates because payments are low when the first graduate, and increase as earning power increases over the years. This plan is available by consolidating through a bank or other lender.

It is important to note that according to current regulations student loans may only be consolidated once. So borrowers who have already graduated and consolidated with a standard plan cannot take advantage of the income contingent or graduated plans. For borrowers who have already consolidated, a forbearance may be the best option for temporary relief of student loan debt.

Use the student loan repayment calculator from finaid.org to find out what loan payments could be using different types of consolidation.

College graduates can find student debt relief using one of the solutions mentioned above. Discuss loan repayment options with your lender and see what can be done to help you repay student loans.

By: Michael Carter

What Type of College Student Loan is Perfect For You?

admin — Wed, 12 May 2010 23:33:31 +0000

Now that you came to the conclusion a higher education is definitely in your future, you need to start looking into precisely how your planning to pay for it. While looking for student loans you are likely to discover both government loans in addition to private programs. Each of those two groups, have a number of different types of loans to select from. It will require some time, however, it will likely be time wisely spent if you learn the differences concerning all of the types of programs being offered in each groups.

The very first type we’ll discuss is the Federal loan programs being offered. Let’s start with the Stafford loan. To qualify for this one your FAFSA application must verify that you have a financial need. This is a Federal subsidized loan, but instead of borrowing the money directly from the government, you borrow from a tradition lender. With this program you are giving time after you graduate to get a job, before you actually need to start paying the money back.

The Perkins loan is another option that might be available to you.. To qualify for this loan the student most likely will come from a low income family and show a real financial need. What makes this loan one of the best to qualify for, is the fact that it is a low interest loan. Like the first option we talked about this loan also has a grace period before you need to start making payments.

The next type of loan we’ll cover is the Plus loan, and it is available not only to the student, but to the parent of the student also. The families income will determine how much money is available to the student and the parent. Because these loans are available to both the parent and the student at low interest rates, they allow the family to contribute to the burden of paying for the child’s education.

The next group we’ll mention are Private student loans, and the terms of this type of loan are dependent on the lender. The problem with most of these loans, is they are given based on the students credit score, which most high school age students will not have much of a credit history. The signature student loan is available to those students with good credit or those with less than a good credit score may still qualify with a qualified cosigner. These loans should be the loans of last resort, and a student and their family should take advantage of any of the Federal loans or grants that they qualify for, before they apply for a Private loan.

If you are thinking about going to a tech or trades school, you could qualify for the Career Training Loan that is available from Sallie Mae. While the loan is given based on credit history, it is also available for on line courses which makes it worth looking into. The money from this loan could be used for educational expenses other than tuition. Sallie Mae offers flexibly payment plans with no early payment penalties.

The most important thing to remember is that you should start early and research all the different loan options that might be available to you and your family. The cost of a higher education means that most students graduate with substantial debt, so it is important to get loans with the best available terms.

By: Mike Considine

The Advantages of Getting Guaranteed Loans For Students

admin — Wed, 12 May 2010 20:48:33 +0000

Have you been having trouble paying for your school needs? If you have been having so much trouble paying for the things that you need in school that is not a reason for you to quit school and give up on your dreams. Always remember that having a college education is very important if you want to succeed in your chosen field. If you cannot afford to pay for all your school needs on your own, you better take out a guaranteed student loan. Remember, getting a quality education is important for your financial future. However, you must always think about what the repercussions are of taking out those student loans. Most student loans are flexible and almost everyone will qualify for one, no matter what their credit situation may be.

There are many types of guaranteed student finance being offered in different colleges and universities today. These guaranteed loans are backed by government funds so the interests are usually very low and the payment terms are not as onerous as most other student loans being offered by private financial institutions. In most cases, you will be given six months up 18 months grace period after graduation before you get to start paying for your guaranteed student loan. This means that after graduation, you still have two years to enjoy your income before you start paying your debts. What is really more interesting about these guaranteed loans is that you are given up to 10 years to payment for your entire obligation. Since the payment period is quite long, your monthly payments will be considerably lower as compared to other types of student loans.

Since guaranteed loans are backed by government funds and the government pledges to buy back the loan in case the student failed to pay for the loan, most financial institutions that are offer this type of loans are not strict when it comes the requirements and qualifications of students asking for the loan. In most cases, the financial institution will not conduct the usually credit checking so you will not have to answer all those embarrassing questions about the status of your finances. If you can present the standard requirements of the guaranteed student finance program, you will most certainly be given the money that you need for your studies.

Getting Guaranteed Loans For Students

If you want to get guaranteed loans for students, you should go to your university’s student loan assistance office. All colleges and universities have this kind of office. If you are not familiar with this office, look it up in your student guide then go to this office and inquire about guaranteed loans for students. When you go to the student loans assistance office, make sure that you talk to the student loans officer and ask questions. Note that there are many kinds of guaranteed loans for students. Ask the student loans officer about the advantages and disadvantages of these different types of loans before you decide which type of guaranteed loan you will get.

By: James Copper

How to Defer Student Loans?

admin — Mon, 12 Apr 2010 08:47:38 +0000

Deferment is the act of postponing further repayments of specific debts. It’s an agreement between lender and borrower. Often, it’s a sign of desperation from the borrower and an act of leniency on the part of the lender.

In the end, you would still be required to pay the amount you owe. That’s the nature of borrowing money; the law protects the interests of both lenders and borrowers. Often, the lenders are at a better position to use the legal system for the purposes of demanding from borrowers unpaid dues.

What Is It?

Concisely, deferring a loan means you’re unable to pay the debt. If you’ve recently lost, your job and you won’t be able to find one like it for three or four months, the deferment would probably give you’re the four months or even more. Deferring a loan would mean you’re given a grace period once again. Once the new grace period ends, the lender expects the borrower to once again resume regular payments of the debt.

Interest Rates: Forbearance and Deferment

The basic difference between the two aforementioned situations is that with forbearance, the interest rates change over time. In simple mathematics, forbearance allows your interest rate to geometrically increase over time.

With deferment, the interest rate simply stays put. It’s frozen until you’re ready to pick the mantle up once again. In a way, deferment is a kinder alternative to forbearance, since you won’t have to deal with a larger debt after the grace period.

Qualifications

Just like medical school (or law school), there are qualifications for individuals who wish to make use of deferment. If you fit into the image of a person who really does need it, you would probably get it. Like what we’ve mentioned earlier, you’re a valid applicant if you’ve been laid off. Having no work translates to zero income, so it would be pointless to attempt regular payments.

Another qualification is that you’re back in the academe once again. Studying means you’re bound to engage in another round of loan applications. No point in repaying loans while you’re suffering in a stifling anatomy laboratory.

For those who are engaged in pedagogy or teaching, you’re also entitled to deferment. If you’re a passionate individual who found work in an area of the United States where the people are poor and your income is considerably lower than your counterparts in other areas, then you may request deferment.

Let the Lenders Know

It’s deleterious to think that lenders aren’t willing to listen to any of your complaints or problems. In fact, most lenders are all-ears to borrowers who are having trouble repaying the money the lenders sorely need.

In this light, make sure that you’re in constant contact with your lenders. If you’re dealing with a bank, then make sure that your bank is aware of all the reasons why you can’t pay back your loans.

Let the lenders help you: give them a reason to grant your application for deferment. After your application has been granted, it’s your responsibility to file all-important documents and keep track of your grace period.

By: Frenn Guy

Student Education Loan Facts – An Overview

admin — Fri, 02 Apr 2010 11:51:49 +0000

Preparing for college can be one of the most exciting and challenging times of a person’s life. Deciding on how you’ll finance your education is certainly one of a student’s larger challenges. Obviously, you should exhaust such options as savings, grants, and scholarships first. But when those options fall short of your needs, a student education loan is a logical choice to fill in the gap.

Student loans come in a variety of flavors, with loans tailored for students with exceptional need, and loans for the needs of average students. There are even loans specifically designed for medical students. There are also federal and private versions of these loans.

It is easy to understand how a student would feel overwhelmed with so many education financing options. But like most things in life, there’s a method to the madness. And with just a little insight into the pros and cons of each loan type, students and their parents can see more clearly the options that are best suited for an individual student’s needs.

Of all student education loan options, the one with the most attractive terms is the Perkins Loan. Perkins Loans have an incredibly low, fixed interest rate of 5 percent. These loans also have a longer “grace period” – the time allowed after leaving school before payment is required. Perkins Loans offer a 9-month grace period, as opposed to 6 months with a Stafford Loan. Another huge benefit of Perkins Loans is that they don’t begin to accrue interest until after you have left school.

Your Perkins Loan may also qualify for Loan Cancellation, which could pay back a portion, or all, of your student loan. Federal Loan Cancellation is offered to graduates who agree to work in high-need areas, such as agreeing to teach in a designated low-income school. The downside of Perkins Loans is that they’re not available for everybody – these loans are designed for students with “exceptional need.”

If Perkins Loans are not an option for you, then Stafford Loans are the next best thing. Stafford Loans offer benefits similar to Perkins Loans, with interest rates currently running in the 5 to 7 percent neighborhood – still very reasonable, as loans go these days. Like Perkins Loans, Stafford loans don’t require repayment until after you leave school or drop below half-time student. They also feature a “grace period” of six months before payments must begin.

Stafford Loans are offered directly from the federal government, and are also offered through the use of a private lending institution. Depending on the college you’ll attend, you may have the option of taking either a direct federal Stafford Loan, or taking the same loan by using a private lending institution as an intermediary. With some schools you may have both options. With regard to private lenders, certain colleges may have specific institutions that they regard as ‘preferred lenders,’ but remember that you have the option to seek your own private lender for a Stafford Loan.

If you find that grants, scholarships, and federal student loans don’t cover your needs, private student loans are always an option. Private student loans are a good value, but they generally feature slightly higher interest rates than their federal counterparts, and these rates are generally variable. Because private student loans are not federally-backed, you will likely find that you will need someone, such as a parent, to co-sign for you. Even if your credit allows you to secure financing on your own, having a cosigner is a very wise choice, since this can lower your loan’s interest rate. Lowering this interest rate, even by a fraction of a percent, can make a major difference in lowering the total amount of money you’ll have to repay on the loan.

Unlike federal loans, private student loans may require that you begin making monthly payments while still in school. These payments may be in some reduced form during this time, such as an interest-only payment. Even if your particular loan doesn’t require any type of repayment while in school, it’s still a good idea to send what you can, when you can. Even small irregular payments, made ahead of time, can have a huge effect on lowering the total amount you’ll have to repay.

Student loans, especially the federally-backed versions, are a great value for students and their parents when other funding options aren’t enough. It’s true that the many different types of student loans can be confusing to sort through. But more loan options means you’re more likely find a fit that is better for your specific needs. And by having a basic knowledge of the various education financing options available, it will be much easier to find the fit that’s right for you.

By: Johnnie Rhodes

Student Debt Consolidation Loans – Who Qualifies?

admin — Mon, 08 Mar 2010 02:04:24 +0000

If you have attended college and it wasn’t paid for by an employer in attempt to further your degree, chances are that you have incurred some student loans. For many student loans are sort of put on a back burner, at least temporarily, because they don’t have to be paid back until you have graduated or are no longer attending school. These loans become payable after six months.

Many people look to consolidate their student loan which is very similar to refinancing your mortgage. This is a way of taking several student or parent loans and putting them into one loan. If you take the weighted average on all of the loans that you want to consolidate and round them to the nearest 1/8 of a percent but with a limit of 8.25%, that would be your interest rate.

This doesn’t necessarily mean that your interest rate will be lower but when you are consolidating loans that have varying interest rates, yours should fall somewhere in the middle. There is never a fee to consolidate student loans and if anyone tries to charge you one then they are likely a loan scammer.

Anyone can consolidate their student loans however they can only be consolidated for one borrower. That simply means that if a parent and a child had separate loans they couldn’t consolidate them together. They could however consolidate them separately. Not since 2006 have married couples been able to consolidate together. It was determined that it was too risky in the event of a break up to have them paid.

The grace period on a student loan is six months after they have left school. It is during that time or during the repayment of the loans that the student would qualify to consolidate their loans. The exception is for Parents Plus loans which can be consolidated at any time.

Many times consolidators want to make sure that you have incurred a specific amount of debt before they are willing to consolidate. This amount is usually a minimum of $5000. The only thing that lenders can control is the amount of debt but they can not discriminate on any other condition about the debt.

Any kind of federal loan can be consolidated. Loans can only be consolidated one time but consolidation can be an option again if there are new unconsolidated loans added to them.

By: Chimezirim Chinecherem Odimba