over the Student Loan Nightmare.
The recent news about a 1.90% increase in the interest rate
on consolidating student
loan by the government has disappointed many students.
While it seems like a major hike in the interest rate, but surprisingly
the rates are at their lowest in nearly the past four decades.
interpretation of this piece of information will signify how
essential it has become to consolidating
student loan if you want to save on your student loans.
Different types of student loans:
take a look at some of the different loan options available
for the students. To begin with we have Federal Perkins loans
which are usually granted by the financial aid office of the
college. The financial aid office carries out detailed procedures
to determine the students who qualify for such loan programs
as these loans are based on needs. After ascertaining the list
of students who can be granted a Perkins loan, the financial
aid office also works out to on how much can be granted to each
of these students. The funds to be distributed in the form of
Perkins loans are usually very limited with most colleges and
universities, and for this reason such loans are awarded very
The other option, which is more commonly used by most college
students, is to get their education sponsored through a Federal
Stafford loan. This consolidating
student loan option is used extensively by students pursuing
both graduate and undergraduate school. There are two types
under this, the first one being subsidized Stafford loans under
which the Federal government makes payment for the interest
on the loan while the student is still in school and even during
the grace period provided after graduation and the second one
is unsubsidized Stafford loan where Federal government provides
no assistance and the interest during the school period will
also have to be paid by the student.
Apart from government sponsored loan programs the students can
also make use of private student loans which are available through
a variety of lenders. These are usually used by the students
to cover up the gap between the total cost of education and
the amount received through financial aid.
Consolidating is the key:
the student has completed school and the grace period is also
about to end, worries
about paying back clutter the students mind. However daunting
paying back for student loans may sound, resist the temptation
to dodge on your student loan payments.
Defaulting in loan payments offers no solution as your credit
ratings get seriously affected. Also, declaring bankruptcy may
not help because student loans are granted immunity to bankruptcy.
Apart from this there are some serious consequences which will
directly affect your career, as penalties are imposed by the
IRS on student loan defaulters and corrective measures may involve
interference with your wages.
The smartest move to make repayment easier for student loans
is to get all the existing student loans consolidated. Consolidation
comes with a lot of advantages and convenience for the students.
Consolidation is a method of getting a refinance after all the
outstanding loans have been clubbed up together. With a new
loan amount, all the existing loans are paid off and the student
is liable for this new loan only. While getting the loans consolidated
the student can extend the term of the loan to suit his convenience
and also lock in the interest rates. The monthly payments can
be brought down by consolidating your student loan for a term
longer than ten years, which is the usual repayment term for
most Federal loans. The possibility to extend the term of the
loan is dependent on the total outstanding balance and if the
balance is high it can even be extended up to 30 years. Smaller
monthly payments can make it much easier for you to pay back
your student loans, although this would mean increased amount
of interest to be paid over the loan.
The consolidated student loans are not subject to prepayment
penalties and you can even go ahead with paying more than the
minimum monthly payment to clear up your student loans faster,
once your income increases.
The head start.
new changes have been made this year which we shall discuss
here especially for students who have not yet graduated. The
new rule allows the students to move ahead with consolidation
of their loans even while theyre still in school. In case after
consolidation you pick up more loans those can either be consolidated
separately on can be consolidated along with your already consolidated
student loans. Students who are in their six months grace period
are also eligible for an additional discount of half a percent
on the interest rate of the consolidated loan. Also consolidating
during the initial months of the grace period will not mean
that you will lose out on the entire race period, because the
lender can delay the disbursement of consolidated loan till
the end of the grace period. By doing this the student is able
to lock in the current rate of interest while enjoying the grace
period as well.
Consolidation can be carried out for Perkins, Federal Stafford
and PLUS Loans, and even the earlier carried out consolidations
can be reconsolidated. Consolidation is not possible for private
loans because there is no Federal guarantee associated with
such loans. Usually the lenders will require that you have an
outstanding balance of more than $7,500.00 if you want to get
your loans consolidated.
Reasons to consolidate:
comes with loads of benefits for the student. Here is a list
of some of the benefits:
With consolidation the student is able to lock in a low fixed
rate of interest for the entire term of the loan. However, not
everyone is lucky enough to get the lowest rates on consolidation.
2. After consolidation the student has to make just one single
monthly payment to a single lender which saves him the trouble
of writing multiple checks every month.
3. The monthly payments can be brought down to a level which
is easier for the student to manage by extending the term of
When youre ready to get your consolidating
student loan do a bit of research about the lenders and
the consolidation programs offered by these lenders, and proceed
only after you have inspected every aspect of the offer.
According to experts it is only
after getting familiar with the financial market that we can
possibly apprehend ...
Believe it or not those guides
and books have nothing of value, all the information they contain
is superfluous ...
3. car financing
Theoretically speaking if you
have recently filed bankruptcy, you may wonder if its possible
to get auto financi...