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The Graduate and Professional PLUS Student Loans

If you are a graduate or professional student in need of financing for college, the Direct PLUS loan may be right and one of the best student loans for you. To qualify for this federal student education loan, you must have already earned a Bachelor degree and be working toward an advanced degree in your chosen field. Parent student loans are also available through the Direct PLUS program if you are under the age of 25 and are dependent on your parents for more than half of your support.

Terms of the Direct PLUS Loan for Students and Parents

Unlike other forms of federal student loans, the Department of Education checks the credit history of the primary applicant for federal student loans. A good credit history is required, whether the applicant is you or one of your parents. If neither you nor your parents can pass the credit check, your federal student loans request will be denied.

How to Apply for the Direct PLUS Loan

In order to be considered for this loan type, you must first complete and submit the Free Application for Federal Student Aid (FAFSA). Before the college you plan to attend can determine your eligibility for graduate student loans, it must first determine the maximum amount you can receive with either a direct subsidized or an unsubsidized Stafford student loan. Once that step has been completed, your next steps in obtaining a Direct PLUS are to fill out the application and the Master Promissory Note . This is a promise to pay back all of your graduate school expenses, plus all interest that accrues while you are in school.

Direct PLUS Loan Limits

Under this loan for professional students, you can borrow up to the cost of attendance at the college of your choice for one school year. Prior to issuing you the Direct PLUS loan, the Department of Education will deduct the amount that is equal to all other forms of financial assistance you are eligible to receive.

Fees and Interest Rates

Before each disbursement of your Direct PLUS loan, the Department of Education will deduct four percent of the total as a processing fee. In addition, you will be charged a 7.9 percent annual percentage rate and deducts a 4.0 percent fee each time a loan disbursement is made. This is a fixed interest rate that is not subject to market variations.

Repaying Your Loan for Graduate Students

The repayment period for a Direct PLUS loan begins as soon as you receive the loan, but it can be deferred while you are attending college at least half-time. Once you graduate or drop to attendance level lower than half-time, your first payment will be due within 60 days. You may be able to extend the deferment period to six months if you received your loan after July 1, 2008.

After you begin making payments on this loan for professional students, you typically have between 10 and 25 years to repay it in full. If you do not make any payments on your Direct PLUS loan during the deferment period, the interest will be capitalized and charged to you once repayment begins.

Types of Repayment Plans

The Department of Education allows several options for the repayment of federal student loans. The standard repayment plans provides a fixed monthly payment and up to 10 years to repay your loan. The extended plan is similar, with the exception that you have up to 25 years for repayment. A graduated repayment plan starts out low and then the monthly payment increases every two years. Finally, you may be eligible for the income based repayment plan if you meet income and family size guidelines or work in the public service sector.

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Applying for Student Loans Consolidation What You Should Know

Student loans consolidation is type of loan which allows borrower to replace several student loans like Perkins Loans, PLUS Loans or Stafford Loans or some private loans with just one. Under this plan, students can borrow enough money in one loan to repay other student loans. In case of federal student loans, the Federal Direct Student Loan Program lets you to consolidate most federal loans. For the private student loans, you can apply for a loan and use it to repay several private loans, so as to consolidate the sum and combine multiple repayments into one.

Benefits and Drawbacks of Student Loan Consolidation

There are some advantages of getting student consolidation loan, such as follows:

  • Student Debt Consolidation loan may have a lower interest rate than the rates on credit cards, so the loan should reduce student’s interest charges and help him/her eliminate credit card debt, finally.
  • You may have the opportunity to repay your student loans over extended period of time, which is advantageous because decreases your monthly payments.
  • If you take a private student loan, compared to federal loans, it is possible to negotiate more favorable interest rates with bank or other lender.
  • By joining your federal student loans with a for example, bank or other lender, you owe money to the bank instead to the government, which can be beneficial since if you fail to repay your federal loan, government can take hold on tax refunds; the bank cannot do this.
  • In case you have a negative credit rating report due to your previous student loans, a consolidation loan can let you repair your bad credit history.

On the other hand, there are some downsides of getting student loans consolidation as well.

  • Loan repayment extension, often from ten to thirty years means that at the end you will pay back the much higher total amount of the loan than the particular loans were themselves.
  • You may be eligible for interest release on condition that your student loan is guaranteed by the U.S. government. After student loans consolidation the bank will not give you interest relief.
  • In case you have bad credit or job history the interest rate charged on your student loan by the bank may be higher than interest charged under the federal student loans.
  • Consolidation loans are not available to all students; you must meet certain eligibility criteria to qualify for the student loans consolidation.

Eligibility Requirements

To qualify for the private Student Loans Consolidation Plan, you must meet some conditions:

  • You must be working or have some other source of monthly income allowing you to pay off the loan. Bank will estimate your ability to manage your debt based on your income.
  • The bank will also require the copy of your monthly budget statement to decide if you can handle your loan repayments.
  • To satisfy requisites set up by the bank or other lending institution you are dealing with, you may need a co-signor or collateral (such as a house or a car).

How to Apply for the Student Consolidation Loan and Repayment Options

The application process is very simple. You just need to fill the online application (also available in paper form) and Promissory Note and submit it to apply for a Direct Student Consolidation Loan. The application also includes your Borrower’s Rights and Responsibilities. In addition, you will have to complete Repayment Plan form in order to select your repayment plan. You can choose from several repayment option and some of them are: Income-Based Repayment which depends on your income, which means that the repayment amount is going to rise as your income does; Income-contingent and Income-sensitive plans for individuals with fluctuated income.

For self-employed individuals who have their income fluctuated, income-contingent or income-sensitive repayment plan can be most advantageous solution. According to this plans, as the borrower’s income rises and falls, the amount of their loan also does. In fact, income-contingent and income-sensitive plans are very similar to previous IBR and can be considered as it variations.

Before You Apply

There are some important issues to take into account when you are thinking of taking the student loans consolidation plan. Firstly, always do a little research on the loan characteristics, available repayment options, interest rates and other term and conditions. Do not sign any contract before you are sure that you completely understand all the matter you are getting involved with. Read as much articles about student loans and available borrowing options to figure it out which one is the most appropriate for you. To determine if you are eligible for a Student Loan Consolidation plan, contact department of Education, your bank or lending company to obtain all the necessary information.

In the long run, a consolidation loan typically pays more interest over time due to the extended loan term, so be aware of this before you apply for your student loans consolidation.

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