Getting Out Of Student Debt
Posted by admin | Finance | Posted on January 13th, 2010
Whether you are a college student or the parent of a child planning to attend college, student debt will become an issue that must be dealt with.
Studies have shown that nearly 75 percent of all college students rely on some form of financial aid while attending college. This includes both private and public schools. Some of the aid that students rely on comes from grants and scholarships which do not have to be repaid, but other forms of aid come as student loans, which, of course, do have to be repaid.
There are, of course, those other forms of loans such as those that parents take out to help pay for the cost of college. These often fall into the category of home equity loans when the parents have access to cash in the home. At other times, they are simple personal loans taken out at banks and credit unions.
Regardless of the type of loan or combination of loans that are needed to finance the education, the student is often left with a substantial debt burden that has to be addressed once he or she leaves school. With the cost of college increasing each year, the debt burden that the student assumes can play a major role in the person’s immediate financial future once he or she leaves school and begins to work.
Some types of student loans will have terms and conditions that are fairly straightforward and set. For example, the Stafford loan program or the PLUS loan program will have terms and conditions that most, if not all, of the applicants must agree to. There is little negotiation in these subsidized loan programs. On the other hand, if parents or student are exploring the possibility of using their own credit to borrow funds, then the onus should be on finding the best loans with the lowest interest rates. In addition, other terms may be worked out with the lender that can allow some leeway with the repayment options.
Historically, one of the worst ways to finance college is through the use of credit cards. Using credit cards to finance college can present a few problems. The first is that credit cards will often have very high interest rates. This can be especially true if the card is obtained in the student’s name. Most student-aged people do not have enough past credit history on file to allow them the best rates on credit cards. The second problem is that credit cards require an almost immediate payment as soon as something is charged to them. The usual time before the first payment is due is often less than two months from the initial time of the charge. Lastly, credit card payments must be made each month or the student will begin to receive negative marks on his or her credit report. This will lead to a lower credit score and the possibility of even higher rates in the future.
Student debt is an issue that needs to be addressed as far in advance as possible. All students should begin the process by applying for grants and scholarships as soon as they can. This will help to eliminate some of the need for loans and future debt.
Federal Student Loan Consolidation Facts and Information You Can't Miss
Posted by admin | Finance | Posted on January 6th, 2010
Federal Student Loans are easier to pay and brings less long term hassle and panic if these debts are converted into Federal Student Loan Consolidation. Consolidating your loan means that all the different types of student loans you acquired will be combined in one loan. Doing so has many advantages. Since federal student loan interest rates are currently at their lowest, loan consolidation actually means that the interest rate used for the whole duration of your loan is fixed.
However, there are also disadvantages when one avails student loan consolidations. It all depends on you, really. If you think it would take you a longer time to pay off your student loan, you will then consequently pay more interest during the course of your whole loan repayment. However, since in consolidating your loans, there are really no penalties in prepayment and if you continually pay the same amount of payments before actually consolidating your loans, the interest you will incur would not increase. You will be able to pay the student loan off faster than when you did not consolidate your loans.
One category you could take into consideration regarding federal student loans is availing of the FFEL consolidation loan. This loan program helps any borrower via multiple repayment schedules. Through the FFEL loan consolidation program, only one payment is made each month. In the FFEL program, the student loan consolidation you will be acquiring will be made by a commercial lender, after which credit bureaus will tell you that you already have a zero balance in your account, after doing so you will then sign a fresh promissory note indicating that you will have a new interest rate and schedule of repayment. But, in order to avail of the FFEL student loan consolidation, you must currently be in repayment on the loan you defaulted or that you have been able to make at least three voluntary and on time monthly payments in full.
Again, refinancing student loans depends on the borrower. The United States Department of Education does not in any way allow any borrower to refinance a student loan consolidation. But if in case a borrower has an additional federal loan that is not originally included in the loan consolidation, these debts may then be added and calculated again into a another Federal Consolidation Loan. Another advantage when one avails of student loan consolidation is that there are no fees or charges incurred. The United States Department of Education does not in any way make charges or collects any fees to any borrower who avails of the student loan consolidation.
So now that the details and advantages have been outlined, the following is a basic list of some student loans that are eligible to be consolidated: PERK – Federal Perkins Loans, formerly Nations Defense/National Direct Student Loans (NDSL), PLUS – Federal PLUS (Parent) Loans, SCON – Subsidized Federal Consolidation Loans, UCON- Unsubsidized Federal Consolidation Loans, SLS – Federal Supplemental Loans for Students (formerly Auxiliary Loans to Assist Students (ALAS) and Student PLUS Loans), SS – Subsidized Federal Stafford Loans & Guaranteed Student Loans (GSL), DSS – Direct Subsidized Stafford Loans, DUS – Direct Unsubsidized Stafford Loans, DPLUS – Direct PLUS Loans, DUCON – Direct Unsubsidized Consolidation Loan, including Direct PLUS Consolidation Loans.
Student loan consolidation has another advantage. A borrower is still entitled to avail of the same Federal benefits. This is because student loan consolidation is a federal program. And being it a federal program, a borrower is more than welcome and is entitled to various benefits such as deferment, interest that is tax deductible and forbearance. Plus, the student loan is guaranteed by the government and is insured federally.
Student Debt and Student Loans
Posted by admin | Finance | Posted on November 15th, 2009
style=”FONT-FAMILY: Verdana”>The statistics show that more and more students are graduating from university with significant debt. The debt levels are growing year on year and many students will be paying them off for years after they graduate. It seems that the consumer addiction to credit and spending has effected the student population just as much as every one else. The fact that most students are not earning anything, and are living either on funds provided by their parents, or on money borrowed, they continue to spend millions each year.
These costs are spread over a variety of areas. Accommodation and other living expenses represent the largest portion of the expenditure. Added to this is travel to and from university, holiday and summer travel expenses, and entertainment. While students are generally financially responsible and not as out of control as many patents would have you think, they do continue to spend a huge proportion of their money on entertainment and socialising.
Employment
Many students will also be working part time during their studies. There are a lot of jobs available and finding one is not a problem for most students who genuinely want one. Employers recognise their flexibility and willingness to work unsociable hours and also that they will generally be happy to accept minimum or close to minimum wage. Therefore, while the jobs are there, they generally pay little, and students who work more than 10-20 hours a week are probably putting a serious strain on their studies and risking their future chances of success.
Most student debt is comprised of student loans. The student loans company based on eligibility criteria provides these. These loans are cheaper than credit that is available on the market from high street banks and have other significant advantages for students. Firstly, students will not have to start repaying the loans until they are earning a set minimum amount, currently around the £15,000 mark. Then there is also the fact that loan repayments are calculated according to earnings levels and are therefore always reasonably affordable. Students are giving as much time as they need to repay the loans and the interest rates, as said before, are very favourable.
Overdrafts
As well as these student loans however, many students will also have other forms of debt. Most banks are offering interest free student overdrafts of up to £2,000 and there are not many students who do not use this up pretty quickly. Then there are bank loans, store cards and credit cards. All of these represent a significant amount of debt that most students are living with.