Archive for the ‘Student Loan’ Category

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Federal Student Loan & Your Education

Sunday, March 9th, 2008

When many students go to school they do not have the money to pay for their higher education, resulting in the need for loans and grants to pay the tuition, living expenses and associated costs. Many take out a federal student loan or two, or three in order to make ends meet while they also pay for their education. One of the advantages of a federal student loan is the interest rate is fixed by the government and while many of the loans are handled by traditional lenders, the loan is guaranteed by the government.

The lower interest rate makes them attractive alternatives to other educational funding choices and the fact they are guaranteed by the government often makes them available to students who may otherwise not qualify for a loan. Another good thing about a federal student loan is that payments on the loan are usually deferred until six months after graduation. Any interest charges, on a subsidized loan, will be paid by the government until the end of the deferred period.

Any money the student pays on the loan during the deferment period will be applied to the principal reducing the overall amount due on the loan. At the end of the deferment period, the student will be responsible to make the full payment, including interest on the federal student loan. For non-subsidized loans, interest will begin to accrue immediately upon graduation, added to the total amount of the federal student loan.

Portions Of Federal Student Loan May Be Forgiven

The government is all about helping recent college grads with their federal student loan and there are numerous ways in which a portion of the loans can be forgiven. By volunteering with some organization such as the Peace Corps or VISTA can erase part of the loan balance for every year the graduate volunteers with any of the agencies.

There are also some programs aimed at new teachers that teach in certain locations where a portion of the federal student loan is forgiven based on the time they serve in those schools. For most, a five year stint at one of the schools can erase about 85 percent of the federal student loan debt.

It is also possible that providing free legal and medical services in certain areas of the country will result in forgiveness of part or all of the federal student loan. Checking out all of the possibilities can help reduce the overall amount of debt, if qualified, and help get the federal student loan paid off much faster.

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Student Loan Debt Consolidation Makes Your Life Easier

Sunday, March 9th, 2008

When most students graduate from college their mains concern may be in finding a job where they can put their newly acquired skills to work earning a living. However, in about six months all the loans they took out for college are going to start coming due and the total monthly payments may take a large chunk out of their income. By finding reasonably priced student loan debt consolidation offers they may be able to have enough money left over for food and transportation.

While the government offers some programs for federal debt consolidation, loans there were granted by banks and other lending institutions may not be eligible for inclusion in these student loan debt consolidation loans and other sources may have to be considered. Additionally, many college students received credit cards while in school and those payments will still have to be made in order to protect their credit rating.

Ideally, the student can find a way to receive student loan debt consolidation and still have money to pay their credit cards or other loans, but in many instances, the consolidation loan may need to include their credit card balance as well as some other loans. While there are sure to be many offers on the table, it will require some research to get the most out of the cost of student loan debt consolidation.

Total Payback Amount Considers More Than Interest Rate

When calculating the cost of student loan debt consolidation, the student needs to also take into consideration the length of time they will be paying on the loan as well as the interest rate being charged. Simply lowering the monthly payment may be enough to get many students to sign on for student loan debt consolidation, but if the total amount of the loan is exceptionally high, over the long haul, it may end up being more expensive.

Many recent graduates are willing to accept the additional charge to enable them to have some cash left over at the end of the month, planning to increase payment amounts as their income increases to pay down the student loan debt consolidation. However, with increased income usually comes an increase in lifestyle and the additional payments rarely become a reality.

Before agreeing to student loan debt consolidation loans, try different avenues to reduce the overall debt. Often times reducing the principal amount reduces the monthly payment and can provide new grads with the money they need to live on.

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Student Loan Repayment

Sunday, March 9th, 2008

There is one aspect of student loans that everyone who has taken them out understands…they will need to be repaid sooner or later. How the new graduate approaches their educational obligation can make a huge difference in their financial well-being and failing to make good on the loans can result in a thick smudge on their credit reports. While nearly every recent graduate struggles with student loan repayment there are some things that can help reduce the burden.

There are a few things that the government will accept that allows part of student loans to be forgiven. Volunteering with certain organizations, military service, teaching in certain school districts or legal and medical service in certain locales can reduce the total amount of the student debt. Looking at these possibilities before beginning a student loan repayment schedule may help the student get out of a debt a lot faster.

The loan balance can also be reduced if the loans are subsidized by the government. With subsidized loans the government pays the interest rate during the grace period before student loan repayment begins and anything paid by the student is applied to the principal balance. Making payments during the grace period will reduce the total amount of the debt.

Do Not Put Off Admitting You Are Broke

People that deal with student loan repayment are used to getting calls from recent graduate telling them they are broke and are willing to work with them on getting their bills paid. By not calling them and explaining your circumstances, there is the risk will go into default and then the trouble can be worse than not making any student loan repayment.

Once a student goes into default on a loan they will not be able to receive any more student loans and the entire loan amount can become due and payable and an additional cost for collection, up to nearly 20 percent can be added to the student loan repayment total. If you have a job, garnishment of wages can be used in which 15 percent of your pay will be taken for student loan repayment and if you are due any income tax refunds they can also be withheld to repay the loan.

There are also circumstances in which a recent graduate may qualify for a deferment in making student loan repayment. Understand it is not necessarily forgiving the amount owed, just putting off when the student will have to start making payments.

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