Investigating Various Options for College Student
Loans and Saving Costs.
Take a glance at the Federal student loan market and you will
discover that the options available are vast; invariably this
could make the task of choosing the most apposite student loan
an almost Herculean task.
When in need of expert guidance and information on all the
possible options this transcript could become very useful. Let
us take a look at some interesting facts before we proceed any
* More than 50 percent of monetary aid for students occurs in the form of loans.
* Some student loans are need based which are granted to families who demonstrate a particular financial need.
* The remaining types of student loan are non need based and are intended to support families in covering the total outlay of education.
* Need based Federal student loan boast
of healthier terms and so these ought to be considered first.
OK now let us look at the four chief categories of
1. Perkins loan: a need based loan that is
normally arranged by the financial aid office, depending on
the level of need of the student. The interest rate relevant
to such a loan is low and the student does not have to make
any repayments during the time that the student is still in
school. The rate of interest on a Perkins loan is currently
approximately five percent (5%).
2. Subsidized Stafford loan: again, this
is needs based and is also referred to as a direct loan. The
rate of interest on such a loan is currently in the range of
four to six percent (4 * 6%), and per the provisions of these
loans, the twelve-monthly interest on the sum is compensated
for by the Federal government until such time as the student
has completed his education and during the grace period which
3. Unsubsidized Stafford loan: this loan
is not needs based and essentially is meant to assist a family
with the prohibitive costs of education, these are not subsidized
and the student is accountable for payments towards the interest
on the loan whilst they are still attending school. The student
has the alternative of capitalizing the interest in order to
evade payment whilst he is still in school. The shortcoming
is that the loan amount rises due to the interest amount being
added to the loan amount which then denotes more money will
have to be repaid on the loan and the monthly payments after
graduation will be somewhat elevated.
4. PLUS loans: are not needs based and are
student loans backed by the Federal government destined for
graduate students. These loans can be made to cope with the
total cost of education subtracted from any other financial
aid received by the student. The foremost advantage of this
loan program is that the borrowing power is greater when compared
to other programs. It is, however, advisable to leave this option
as a last way out.
Other student loan options:
Federal loans options have been discussed and now we will ponder on a number of other loan options.
* Private student loans: there are various
lenders and financial institutions that provide private student
loans. These are not need based and are not supported by a Federal
guarantee. Accordingly they would not be subsidized and usually
come carry a higher rate of interest. The internet has a plethora
of information available with respect to such loans and the
lenders providing same.
* College sponsored loans: some colleges
have a dedicated financial aid office which offers a range of
education funding programs; these are specifically for their
own students. Information on these can be obtained from the
individual colleges. Interestingly the rate of interest on these
loans is frequently lower than the interest rate on Federal
Regarding students education it is not always the student who is taking the
loan, so there are options existing for parents who are taking
loans on behalf of their children. The loan options for the
* Federal PLUS loan: this is most frequently
used and is a source
that parents can use to borrow money to cover the full cost
implication of education less the aid received. Repayment for
such a loan frequently starts sixty days from the date the loan
* Private loans for parents: these come from
a extensive range of lenders and typically bear a high interest
* College sponsored loans: the source is
uncommon due to the fact that only a very small number of colleges
have the funds for such a facility. The onus is on you to verify
with the college what options are available.
By now you are becoming familiar with information regarding student loan options
and prior to ending this topic; we have five money-saving guidelines
for your Federal student loan.
1. Keep checking your interest rates: student
loans usually have a variable rate of interest and the rates
on average change on the first of July annually. Students should
ensure that interest rates increase too drastically and be prepared
to take the required action for instance consolidation to lock
in on a lower interest rate.
2. Automatic payments: automatic payments
not only set aside the hassle of writing checks every month,
but can in addition get your hands on reduced rates of interest.
The student authorizes the lender to automatically remove the
minimum monthly payments, by signing up for an automatic debit
option, for each month from his savings accounts, hence ensuring
that there are no late payments and no late payment penalties.
3. Dont default: in case of a student, having
a problem in putting-together his payments for the student loan
he should get in touch with his loan provider urgently to enquire
if deferred payment or forbearance is probable in his case.
This is vital as late payment attracts fines and damages your
4. Choose the right payment option: there
are many alternative payment options and the student must fully
analyze various payment options to seek the best fit for his
circumstances. By consolidating his student loans he can change
to a more fitting repayment plan.
5. Incentives: some lenders offer incentives
to students who make well-timed payments on their Federal
student loan. The incentives can be either *cash back`
or diminution in the rate of interest.
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