Student loan consolidation » Private Loans

Student Loans – How Interest Rates Are Set on Federal Loans

admin — Wed, 23 Jun 2010 15:11:53 +0000

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

What You Need to Know About Federal Student School Loans

admin — Mon, 21 Jun 2010 10:42:59 +0000

School loans are considered “financial aid” but differ greatly from scholarships and grants because loans need to be paid back. There are three major types of loans, Federal Student Loans, Federal Loans for parents, and Private Loans. This article focuses on the most common type of school loan, the Federal Student Loans.

As the name implies these loans are given directly to the student by the government. Within this main category there are two types of loans; subsidized, which means that the interest is paid by the government while the student is in school, and unsubsidized, which means that the student must pay the interest. However, with unsubsidized loans there is the option to have the interest payments put on hold and added to the total loan until the student is done with school and in a better position to make payments. Subsidized loans are reserved for students who demonstrate a financial need: usually low family income.

Loan amounts are decided based on the students needs, and the students access to family resources, scholarships, grants and other forms of financial aid. Nearly all full-time students are eligible for at least some amount of loan. Both the subsidized and unsubsidized loans offer a six-month grace period to allow the student to find a job in their field and become more financially stable before payments are due. If a borrower becomes a part-time student there is a three-month grace period before payments are due. With Federal Student Loans there is a limited amount that a student can borrow each year.

There are two ways that a student may receive Federal Student Loans; Federal Direct Students Loans (FDLP) or Federal Family Education Loans. FDLP loans start with funds from the U.S. Treasury, these funds are then sent through the U.S. Department of Education and then distributed to the college or university. The school then uses it to pay school expenses and the remainder is available for the student to withdraw. Federal Family Education Loans (FFEL or FFELP) are funded by private banking organizations. The advantage of FFELP loans is that students have payment options available to them that are similar to the options available when taking out a home loan or consumer loan.

Students can apply for Federal student loans online. Most universities and colleges provide computers in their financial aid office where students can apply with the help of people who use the system constantly. Applying online is done through a program called Free Application for Federal Student Aid or FAFSA. By applying online you will automatically be considered for any type of aid including grants, which do not have to be paid back. Applying online can help you find out how much help you will be receiving as much as seven days faster, which will make it easier to secure other funds if necessary.

If a student has turned in a FAFSA application in the past, they can use something called a renewal FAFSA that automatically inserts information that does not change such as name and the school you are attending. This makes the process even faster. Students are also able to sign their application by using a pin number given to them by FAFSA, so there is absolutely no paperwork to be sent through the mail.

By: Chris Simons

College Funding Through Chase Bank Student Loans

admin — Wed, 07 Apr 2010 15:29:09 +0000

When you’re looking for ways to pay for college, you have to research various banks and lenders, and compare their private loan services and also look at what privately-funded federal loan conditions they offer versus direct federal loans from the Department of Education. Chase Bank student loans are available for every step in the higher education process, including federal and private loans.

Federal Stafford loans have the same basic standards whether they come from the Department of Education directly or through a bank, credit union, or other private lender. The maximum fixed interest rate is 6.8%, and you can defer payment until you finish school or drop under half time enrollment. Government subsidized Stafford loans are granted based on need; in this case the government pays the interest on your loan while you study. If your loan is not subsidized, if you defer payment until after finishing school the interest is capitalized.

Parents and graduate students can apply for PLUS loans, which do come with credit requirements but an eligible cosigner can be used. These loans cover education costs that are not covered by Stafford loans, which do not have a credit requirement, and any available student aid. Chase also offers federal consolidation loans; private and federal loans can be consolidated together.

Chase offers a competitive rate on federal loans compared to the Department of Education, cutting .1% off the normal fixed interest rate. This gives Stafford loans an interest rate of 6.7% compared to 6.8%, and PLUS loans have an interest rate of 8.4% compared to 8.5%. Chase offers full assistance in receiving federal loans and helps you with all the necessary paperwork without charging origination or default fees on their loans.

Any other expenses can be paid for with private student loans. With Chase Select loans, you can borrow as little as $500, if you need only a small amount to make up the difference in your cost of attendance and what your other loans and student aid cover, or as much as $40,000 if you need it.

The Chase Health Education Program is specifically designed for people studying to become professionals in the health industry. This is a long and expensive process, and Chase offers a group of loans targeted toward making this possible, from medical school to residency.

You can consult Chase and have your questions answered by phone or online, whichever is more convenient for you. Chase Bank student loans offer private loans and federal loans at lowered interest rates.

By: Adam Hefner

Student Loan Debt Consolidation

admin — Sat, 13 Feb 2010 07:38:06 +0000

Paying back multiple educational loans can be inconvenient and another large debt that seems insurmountable. It almost seems that it will take forever to finally pay off these loans. One way to solve the giant, multiple educational repayment dilemma is to consider student loan debt consolidation.

Consolidating your student loan debt is a convenient way to reduce multiple payments into one payment. You may pay a higher interest rate over a period of time, because you are repaying at a longer period of time. But, at least your payments are manageable.

If you want to know more about student loan debt consolidation, a great place to start is online. Check your credit report, so that you will understand your qualifications for the lending institutions with whom you will apply. You can access your credit report online, as well. It may be smart to obtain your credit report from all three major credit bureaus. If your credit is a bit challenging, you may be required to obtain a co-signer.

Take note that some loan consolidation lenders offer fixed interest rates. Make sure you select the type of loan that will keep your interest rate at its lowest and your payments manageable. To help jump start your research, some student loan debt consolidations institutions to mention are City Student Loan and Wells Far Private Consolidation Loans.

Research your options and ask the right questions. Once you’re confident that you’ve chosen the right institution for your debt consolidation needs, you’re on your way to lower payments and debt relief.

By: Adam Diver

Am I Eligible For Student Loan Debt Consolidation?

admin — Fri, 18 Dec 2009 02:55:38 +0000

As a student who has taken admission in college for the first time or as parents who are planning to send their child to college, you can’t help but cringe, when you have to purchase textbooks worth thousand dollars or when you receive a bill for tuition fees. The rise in expenses associated with college education in United States has led to increase in demand for student loans. This has, in turn, increased the requirement for student loan consolidation services. Students, whether pursuing their studies in a graduate school or studying abroad have accrued huge debts, much beyond, what was considered reasonable, a few years back. Student loans have lower than normal interest rates and very flexible payment terms. This is because these loans are specifically meant for the people who are not employed.

But even with such low interest rates and convenient pay-back terms, many students may find it difficult to pay these loans as per the payment schedule. Student Debt Consolidation programs are customized to assist the students in managing their loans and thereby helping them to avoid defaulting on their debts.

There are debt consolidation agencies which are specially meant to manage debt problems of the students.

Basic Types of Loans

Student loans can be classified into federal and private. If you are one of those students who have taken both types of loans it is strongly recommended that you do not consolidate these two loans into one. Out of these two loans, only loans classified as federal can be refinanced as they are backed by the government. You should package all the federal loans into one and solve them before heading for the private loans. Private loans are mostly unsecured in nature therefore they charge interest rate which is higher than federal loans.

Criteria for Consolidation

If you would like to go for consolidation of your student loan, you will need to meet certain criteria. Firstly, it is required that either you should be out of the school or college and be in what is defined as the “grace period” of your loan or you must have already started repaying the loan in order to take advantage of student debt consolidation service. When you get in touch with a consolidation agency providing service to students, you must begin by asking them to get in touch with your creditors.

The agency will negotiate with these creditors and convince them to reduce rate of interest as well as your monthly payment. The repayment of your student loan has a direct impact on your prospects of taking loans in future, as is the case in any other type of loan. In case your student loan becomes more than 85% of total monthly income earned by you, it will be assessed as a negative score for any future loans. This emphasizes the importance of timely repayment of your student loan and its effect on your future decisions of borrowing money. Based on their evaluation of your financial position and repayment schedules, some debt consolidation agencies can qualify you for further debt reduction programs. These addition reduction programs assist you in many ways, most important of which is reduction in your interest rates. They also include savings made during grace period, automated direct debit payment and on time payments.

Beware

It is very important to state here that not all consolidation companies are genuine in nature. Therefore, you must apply to the consolidation company which is a famous company with credentials to support. Ignoring this advice may lead to substantial increase in your problems as such illegal companies will lead to higher debts.

By: John J. Baker