You’ve got to take on student loan debt these days if you want to go to college unless you are very lucky. Student loan debt is like any debt. The key to how quickly you can pay it off often comes down to the interest rates. For people with federal loans, the good news is interest rates are quirky in a positive way.
The economic condition of the United States is supposedly in a recovery from the Great Recession we recently suffered. With business slow and unemployment in double digits, it is hard to make much of an argument that this recovery has really hit most of us. As we stagger forward, things will improve slowly, but a fiscal accounting must take place. That accounting is going to come in the form of higher interest rates.
We have interest rates that are so low now that we’ve rarely seen such an economic condition in our history. The Federal Reserve essentially is loaning out money to banks at a zero interest rate. That can’t last. When it changes, rates are going to move up and so are your debt loads. For those with fixed rate loans, the news will mean little since rates will stay the same on the debt in question. For those with adjustable rates, things are going to get ugly.
What about federal student loans? Well, I have really good news if you are carrying federal student loan debt. The rates on your loan are not set by the market or some cold bank per se. Instead, Congress actually sets the rates on your loans. The legislative body actually sets a range of rates that can be charged for each loan, but the banks actually issuing the money always [and I mean always!] go with the highest possible allowed rate. The rates can change year to year, but are usually much lower than private loans and such. You can access the current rates for Perkins, Stafford and PLUS loans at the website for the Department of Education.
Like all debt, the interest rates on student loans are going to be going up in the next few years as the Federal Reserve raises rates in general. If you have federal loans, you can expect the pain of these increases to be much smaller than with private loans.
By: Thomas Ajava
Student Loans – How Interest Rates Are Set on Federal Loans
June 23rd, 2010 
admin Student Loans – What You Need to Know
June 21st, 2010 admin
Private student loans are becoming more popular amount college students. In the late nineties the private lenders made about 5% of the student loan market. Today the private lenders have about 20% of the student loans. Although the government limits the amount that the students can borrow, the private lenders are willing to lend much more money, allowing students to get in further debt. However, college student should be wary of the loan that they took out. A lot of college graduates are finding that they are having hard time paying for their college loans after graduation.
The payments for the student loan should make up about 10% of the gross paycheck of a college graduate. Before taking out a loan a student should research the annual income for his future position. However, if you have a family with children this percentage might have to be lower to substitute for other expenses. The mortgage payments, education loans, credit cards, car loans and other loans should not eat up more than 35% of your gross pay. Otherwise large student loans might take a graduating student forever to repay.
Furthermore, some of the choices that students make may change the amount of loan that is due after college. First, remember that the cost of tuition is rising. The cost of the last two years of college will cost about two thirds of the total tuition cost. Therefore budget your loans. Try not to spend money on extravagant things, as if it is unlimited source of money. Getting a summer job and a part time job during college will also decrease your loan amount. Loan of couple of thousands may grow to a much larger amount after couple of years of annual interest rates.
By: David M Siegel
Student Loan – The Basic Facts
June 21st, 2010 admin
There are a lot of different ways of funding your way through college. You might be one of those students lucky enough to have a full scholarship. You may also have rich or generous parents who are willing or able to pay the bills.
However, many students are not so lucky. Most of the above funding sources will only pay part of the bill, not the total. And even if you can get all your tuition paid, you still have to come up with the money for rent, books, entertainment and other living expenses.
Employment
You may be able to get a job. This is a good idea for all students, but it is not always easy to do so. Some colleges are located far from towns with employment opportunities. Sometimes employers are reluctant to hire students as they usually cannot commit to full time work and will likely not be around during holidays. If you do manage to get a job, it will probably not be the highest paying job in the world, and you shouldn’t work more than part time. Remember that your main aim during your college years is to get the best grades you can, and working 40 hours a week just to pay your tuition would be self-defeating.
Loans
So that means that for many students, the only method of paying for college that will be available to them is to take out student loans. Going into debt is always a commitment, and it can be especially stressful before you have even started working and aren’t certain how you will pay back the loans. Student loans however, have a number of advantages over regular loans. First of all the rates and terms are more lenient. Student loans are likely to be at a much lower interest rate than most loans that will be available on the market for other purposes. They will also give you plenty of time to get on your feet and find a job after you finish your studies. This means they are not going to be due immediately after graduating.
Repayment periods on student loans are probably the fairest and most patient you’ll ever get in your life. These rates and terms reflect the faith that lenders put in today’s students. They know that ultimately, college is a good investment and most graduates will be able to pay back their debts if they are just given the time.
By: Joseph Kenny