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What you Need to Know about Consolidating Student Loans

Chances are if you’ve taken out student loans in order to finance your education you have been, or at least will be, receiving calls and offers in the mail to consolidate your student loans. There are actually numerous advantages to consolidating your student loans. In addition to gaining a fixed interest rate you can also potentially lower your monthly payments. In the event that you begin to experience financial difficulties, you may also be able to take advantage of flexible payment options with a consolidated student loan.

Unlike other types of debt consolidation programs a student loan consolidation gives you the opportunity to combine your loans into one package with more attractive terms. You also don’t have to worry about being turned down because of a bad credit score and the interest on the loan may be tax deductible. In addition, in the event of your death your survivors won’t have to worry about paying it back because the debt will be discharged.

If you have a variable interest rate student loan, consolidating the loan can also help you to lock in a lower rate before the rates increase the next year. Over the length of the loan, this one step can actually help to save you a tremendous amount of money.

Of course, in addition to the advantages there are also some disadvantages of which you should be aware. One of the most important is that if you end up lowering your monthly payment you are actually extending the length of the loan and that means you’ll pay more over the life of the loan due to increased interest. You can still take advantage of the other benefits of a student loan consolidation without this disadvantage; however. Just don’t lower your payments unless it is really necessary.

When considering lenders for a student loan consolidation it is important that you always compare the terms of each offer made to you. Consider the interest rate and length of the repayment terms to be sure you are getting the best deal possible.

If you have a mix of both federal and private student loans, you should also be aware that while both types of loans are available to be consolidated it may not be a good idea to consolidate your federal loans and private loans together in the same package. There are stipulations on private loans that are not required on federal student loans, such as no deferments, no tax deductions on the interest, no forgiveness of the debt in the event of death and no forgiveness of the loan for working in certain fields. In the event of a mix of private and federal, it’s usually best to go ahead and consolidate the private loans separately from the federal loans so that you can retain those advantages for the federal loans.

By understanding all of the factors related to student loan consolidation you will be in a better position to make a more informed decision regarding your finances.

Student Loan – The Basic Facts

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.

Simple Guide To Best Student Loans

Being in college is a thrilling experience but it is definitely not easy when you have no student loans to help sort out financial issues.  There are many more payments to make apart from books and Tuition. This is especially critical for students who have stopped living in their parents? homes and have to get used to paying for their living expenses.

Student loans come in very handy at a point where students find it tiring to combine school with heavy bills.  For a student getting his/her first student loans may be quite demanding. The first time may not be easy though.

The government guarantees these Federal student loans and as a result you don’t pay too much interest.  Credit worthiness will determine what rates a student will get and interest rates are likely to be high because it isn’t backed by the government as the Federal student loan. Subsidized and unsubsidized rates are available for students obtaining student loans.

Added interest will only occur on a student loan if someone else will pay for that loan while the student is still in school. One thing is sure; no increase will occur with your interest rates as long as you are still a registered student.  You might not be so lucky if your type of interest rate is unsubsidized because rates will be accrued even while you are in school.

The amount of the student loan will accumulate but this time you will be given more time to pay off the interest that will be added to your principal. So are you finding it difficult to cope with your courses and personal but important expenses? Fill out a FAFSA form now as it gives you a shot at a federal student loan. You may also have to fill a college scholarship profile application form.  It won’t cost you anything to file a FAFSA form and it will cost you a little money to fill the college scholarship service’s application.

FAQs about getting a student loans:

What is a ‘credit record’? A credit record is really a written record of what credit that you have taken out for the last 6 years. It reveals how much you have taken out and whether you have neglected any repayments etc. A credit record permits possible credit providers to look at your financial history so that they will be able to decide whether to lend you money. The statistics on your report is complied by credit reference agencies for example, Equifax and Experian. They use information from public documents (e.g. information from the electoral roll, county court judgments etc) and from lenders as well as financial institutions: e.g. credit applications, credit accounts.

What is a ‘credit check’? A credit check is a form of research performed by a prospective loan company to gauge how eligible you are for a loan. They will look at your credit record to know your ongoing and earlier financial responsibilities. They can then assign you a credit rating to check if the fashion in which you handle you financial matters fulfils their requisites for credit.

What is a ‘credit score’? A credit score or credit rating is a technique that prospective loan providers use for evaluating the credit eligibility of a customer. They will examine the potential customer’s credit report, the data on their application and the specific loan requested. They will then employ a numerical scoring system to evaluate the amount of ‘risk’ implicated in lending to the would-be borrower.

Credit Reference Agencies :

Experian is one of a number of major credit referencing agencies in the country. Loan providers will go to credit referencing agencies to find out about the appropriatenessof a customer by looking at their financial past. This is called a credit report. As with every consumer, you can request a duplicate of your credit file from Experian in order to see that all the statistics on it are right and that your particulars have not been used for some scam.

Equifax is one of a number of significant credit referencing agencies in the country. Equifax compiles all your credit data from a range of sources to establish a file that indicates your credit history – i.e. your credit report. If you apply for credit, loan providers will study your credit file to see your credit record. You can request a copy of your file at any point in order to see that everything is correct. The Equifax internet website has lots of constructive advice on making sensible financial choices and safeguarding yourself from fraudulent practices.

Federal Family Education Loan Program

Students are offered a long-term loan that allows them to continue their studies without paying for their expenses till they complete their school. Such loans are called Federal Family Education Loan Program. After six months of completion of course or withdrawal from the degree program, the repayment begins.        

DigiPen, which participates in the Stafford Loan Program, is the most common loans and mostly meant for undergraduate students. Subsidized loans and unsubsidized loans are the two types of loans, which are offered to students. In the subsidized loans, the government pays the interest while the student is in college. In the unsubsidized loans, the student is responsible for paying all the interest on the loans, during and after college. An origination fee of 3% for both the Stafford loans is charged by the U.S. Department of Education and the loan guarantor. One should be enrolled at least as a half-time student, to receive loan funds. It is possible for a student to receive both types of loans at the same time.

For undergraduate loans The Federal Parent Loan for Undergraduate Students is available. The parents can borrow the entire cost of the education. Any other aid that the student receives will be deducted from the total cost. This loan is not based on the assets of the family. 9% interest is charged. This is liable to change according to the school or the lender. A credit report is essential to acquire this loan.

Bank of America : Stafford , bank of America PLUS, college loan : Stafford, college loan : PLUS, Citibank : Stafford, Citibank : PLUS, Wadhovia Education Finance : Stafford, Wadhovia Education Finance : PLUS are some of the lenders who are in association with the DigiPen.

The student should apply for financial aid and should have a complete file in the Financial Aid Office. A loan entrance counseling session has to be undergone by the student at the end of which the student needs to take a test. On completion of the test positively the office should be given a notice. A promissory note will be mailed after the loan is certified.

Private bank loans are other financial aid options. They are alternative loans. These loans from private banks are very helpful to fulfill the student’s needs completely. The private loans have high interest rates. It is entirely based on credit reports. Many commercial lenders and colleges offer private loans. Bank of America, Key bank, Wadhovia Education Finance and Student Loan Express are some of the lenders with whom DigiPen works.

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