Posts Tagged ‘student loan’

Student Loans – Credit History and Student Loans


Many common student loan programs are not credit-based. Stafford and Perkins are based solely on need and not even do credit checks. But not all will qualify and these programs will often cover less than 100% of the amount needed, especially given the high cost of education today.

Many students and their families would therefore like to supplement them with credit-based student loans. When they do, to show a good credit report to evaluators will result in better access to funds with the best possible rate.

As with any credit-based loans, past history of bad credit does not mean it is impossible to get funds. But it can be very difficult and often results in a higher interest rate.

Avoiding bad credit history can mean the difference between getting a loan or if you get one, are paying much more than you would with good credit. But what is good or bad credit?

The first factor any loan officer will consider is the FICO score. The FICO is a number calculated by the major credit agencies based on a secret, patented formula. Although the exact equation is not public, several criteria are known, and even obvious.

FICO scores are based on debt and defaults, the number of late payments and how late – 30 days, 60 days, 90 days or longer, the amount of credit available, number of new credit inquiries and other factors. All these are weighed and weighted so that, for example, counts a standard very heavily, as do any late payments, with larger late days counting more. The number of recent studies have less credit.

Many students will not have a FICO score at all, not with credit cards or other loans that would generate the data on which the score is based. But the majority of students are assessed by their parents’ credit history, when it comes to granting loans. While student credit history is important, the parents’ income and credit history usually count for more in making a final decision.

Both sides have good credit. First and foremost, it means a FICO above 650, and the higher the better. After a score below that will not get a loan impossible, but it may need additional information that may affect the decision to activate offer. And to get the extra data in the hands of real people who may be affected is not easy.

Apart from the FICO score, and related to it, there are a number of factors that prospective borrowers should keep in mind.

Making payments on time is essential. Evidence of a history of late payments, incurring late payment are signs of a bad credit risk in the eyes of lenders. Staying within the available credit limits is important as well. Avoid the over the limit and other penalties shows a willingness to delay immediate gratification and take responsibility. Creditors are judging not just numbers, but character.

Limiting the number and maximum balance amount on credit cards, can also help. Excessive credit inquiries suggest to lenders that some have difficulty meeting current debt load. This is a signal that the repayment of additional loans can be difficult. This increases the lenders’ default rates – loans not repaid. Financial institutions will try very hard to keep that default rate low. To do so, they sometimes deny credit to borderline cases.

Meet all credit obligations and keep all borrowing to a modest level for a long time. That makes you look like a very good risk to loan officers, which means funding a student loan will be a slam dunk.


Student Loans – Co-Signer and No Co-Signer Loans


A co-signer is a second person who guarantees to repay the loan and usually becomes involved when the primary borrower has no or a poor credit history.

Students often have little or no credit, no car loans, and very rarely a home mortgage. As a result, they have little or no credit history whatsoever. And, as is the case with many of us in our youth, they may have made some unwise choices. She may have gone beyond what they could repay on a credit card and even irresponsible about making payments.

This lack of credit history or, worse yet, actually late payments or defaults can easily put a potential borrower in the high risk category. Loan officers, even in Federal student loan programs will often see that with a careful eye. Loan applications can be refused or, in borderline cases a higher interest rate charged to offset the risk and compensate for higher default rates.

To counteract that lack of credit history or a poor absorption, and in most cases, borrowers must obtain a co-signer. In the event that will mean one or both parents. Loan officers will then look at the parent’s FICO score, outstanding debt to income ratio, repayment history and other common factors when deciding whether to grant the loan.

Meanwhile, the credit quality of the parents is the most important factor in determining the interest rate awarded. People with a superior credit history typically get the best rates, while those with lower FICO scores usually pay a higher rate. The difference can amount to a substantial sum over the standard repayment term of 10 years.

For example, a popular co-signer program shows a 4% program pay $ 5,489 in interest over the life of the loan, rising to $ 10,647 at 6%. A 2% difference does not sound much, but given the current loan amount and complex, such a scenario is not unrealistic.

For example, it is not uncommon these days for students and parents to borrow as much as $ 100,000 to finance an undergraduate education. Even if interest is paid right away (so it does not accumulate while the student is in school, which contributes to the total to be repaid), interest at 6.8 8% is nearly $ 567 per month. The annual interest totaling nearly $ 6,600.

By lowering this rate to 5% (the official figures on a need-based Perkins loans) reduces these figures to $ 417 and $ 4,820. And keep in mind that the example assumes that repayment starts immediately. Postponement of repayment until six months after leaving school, the most common scenario will result in much higher amounts, unless the interest is deferred or subsidized.

Using a co-signer with good credit can significantly reduce the total interest paid, together with improving the chances of getting favorable loan features. Run through some sample scenarios using a loan calculator like the one available on the internet.


Consolidation Loan Student Programs: Bringing Your Debt Under Control

If you are like many students and recent graduates, you very well have amassed a great deal of student loan debt.  In this regard, you may be looking for ways in which you can bring your outstanding student loan balance under control.  You might want to consider the various consolidation loan student availabilities that you can take advantaged of in this day and age.  Through consolidation loan student opportunities, you can take an affirmative step towards brining your outstanding student loan debt under control.

There are a number of benefits to availing yourself of what is available in the way of consolidation loan student availabilities.  The primary benefit that you can obtain through utilizing and taking advantage of consolidation loan student opportunities is a savings in the amount of interest you have been paying on multiple student loans.  As a general rule, consolidation loan student programs offer interest rates at a level under what you normally have been paying on your multiple outstanding student loans.

One of the other significant benefits of a consolidation loan student program is found in the fact that you will be able to relieve yourself of recurring late fees and related delinquent charges that you may be encountering in regard to outstanding student loans.  If you are like many people who have racked up student loans, you very well may be facing ever increasing late fees and the like over time.  Again, through consolidation loan student programs, you can rid yourself of the burdens of late fees and other charges.

An added benefit of taking advantage of a consolidation loan student program is found in the simple fact of convenience.  If you have acquired a number of different student loans, you find yourself juggling multiple payments each and every month.  This can be time consuming and even confusing in some instances.  With the implementation of a consolidation loan student plan or scheme, you will only have to make one monthly payment, easing the burden of keeping track of a multitude of payments each and every month.

There are a number of different financial institutions that now offer consolidation loan student programs.  There are companies that specialize specifically in offering people consolidation loan student opportunities.  In addition to the companies that specialize in consolidation loan student programs, many traditional lenders (such as banks and savings and loans) now have implemented special consolidation loan student programs for students and graduates.  Therefore, you have a variety of sources for a consolidation loan student program to chose from in this day and age.

By taking the time to shop around and consider different consolidation loan student availabilities you will be able to find a consolidation loan student program that best meets your needs and obligations.  Through research and a bit of proverbial homework you will be well on your way to brining your student loan debt well under control, to bringing your financial house into order now and well into the future.  Rather than continually paying for your education, you will make your education pay for you.

Types Of Federal Student Loan Consolidaion

If you are an American student or one studying in a U.S. citizen school, then you are entitled for federal student loan consolidation from the U.S government.

Federal student loan consolidation plans are applicable for all students whether you are still in college or a recent graduate or already into your new career.

If you are successful in your student loan consolidation application, it will help you to reduce the student loan payment amount every month and/or allows you more time to compensate your loans as a student.

If you currently have several student loans, it is simpler if you use federal student loan consolidation to consolidate them into one loan payment thus making it simpler to manage.

The Four Types Of Federal Student Loan Consolidation

The U.S government in a bid to attract more students to require their student consolidation loans have come up with four plans to suit the different needs of students.


1) Standard Student Loan Consolidation

The most student loan period is 10 years and the payment amount every month is fixed. This sort of plan is suitable for students who are able to afford to pay a fixed amount each month. The monthly interest wouldn’t be a big aspect in huge student consolidation loans

2) Extended Payment Plan

This sort of plan is identical to standard student loan consolidation other than it has a longer repayment period of between 15 to 30 years. The repayment period is subject to the student loan amount.

3) Graduated Payment Plan

This sort of plan is worthwhile for students still schooling and can only repay the student loan when they have a job after they graduated. The payment period is between 15 to 30 years. The payment amount each month usually starts low and increase steadily every 2 years. The intent is the as the student has worked for a longer time of time, their salary will increase accordingly and therefore able to pay a larger repayment student loan.

4) Income Contingent Payment Plan

This kind of plan is complex and is founded on the student’s income over a time of years. It is also dependent on the family’s annual gross income, other loan amounts owed, other assets, mortgages etc.

Most student usually choose graduated payment plan or the extended payment plan for their federal student loan consolidation.

Ideal Student Loan Consolidation Programs

Students pass out along with different kinds of loans to be paid off.  They will have to repay each of those loans with different interest rates after the six months grace period making it even more complicated for the students.  An ideal student loan consolidation program will enable the students to pay lesser amount towards interests and also put an end to different kinds of student loans.

The first step is to find the ideal student loan consolidation program. As each and every program has its own pros and cons, the student should weight them and select the best one to suit his needs and financial situation.  The student loan consolidation program helps to combine different loans and pay as one single payment.  The next step is to find the best interest rate towards repayment of student loans.  The student needs to be very sure when it comes to the terms for payback, that is, he should find a reasonable loan termination period or date.  He needs to be very careful, as it needs to be feasible to payoff the loan in the said date.  Although, no one can predict the future, but can have an idea of how much money he can afford to pay taking his income into consideration.

It will be very helpful to find a flexible loan payback program.  This will help them put their loan into forbearance during financial set back times, as there may be ups and downs in anyone’s life.  This will help to put back their finances into order.  Although the period may be flexible, it is not advised to have the loan interest rate to be flexible.  It is good to keep the interest rate fixed, as it may be very effective in budget planning.  While searching for an ideal student loan consolidation program care needs to be taken to find out if any penalty is levied for paying off the loans at an earlier date or for making early payments.  

Tips on student loan consolidation programs:

While finding the best student loan consolidation programs, it is good to do your own research.  With the help of Internet, anyone can search and compare different student loan consolidation programs.  The students need to be aware of the fact that not all programs are equal.  When getting in touch with the lender, it is always good to read each and every mail they send, as they can anytime change the terms and conditions, which might not be favorable to the student.

The student should be very organized in maintaining the documents and correspondences pertaining to the student loan consolidation program.  They are very important as they spell out the obligations of the students.  They should be maintained well until the loan is paid off to avoid any hassles in the future.

Counseling sessions may be conducted when the loan is obtained and after the student has graduated. These are very useful to the student as they provide the necessary information to act appropriately during the loan period.

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