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The most Important Facts on Student Loan Delinquency and Default

Understanding the consequences of loan delinquency and default

There is a very small number of students who don’t have to borrow money to finance their educational costs. Educational loans are the best way for many of college students to gain academic degree because they generally can be deferred until graduation. This means that you will enjoy a grace period after you left school which can allow you to start working before you have to begin paying off your loans. The federal student loans provided by the US Department of Education like Stafford Loans, Perkins Loans or PLUS Loans offer up to nine months grace period after graduation to start repaying your student loans.

It is not unusual, however, for a large number of students to fall making their loan payments when they are due, which leads into delinquency. Delinquency means that you have fallen behind on your loan payments and your account is no longer current. For instance, if you miss to make your payments for a couple of months your loan lender may tag your account as “delinquent”, which in essence means that you owe back payments and are not yet in complete default.

Loan delinquency has numerous consequences which may include some of the following:

  • Extra fees and penalties
  • Bad credit effects
  • Collection efforts
  • Potential Default

The first you should do after you fall behind on your student loans repayment is to call your loan lender or lenders to settle an agreement on your payments and make a deal that works for both parties. Consecutive missed loan payments or extensive delinquency may lead into student loan default. Default comes about after 270 days of failure to pay on a federal student loan or 120 days of nonpayment on a private loan. Under most federal student loans your loan will be put into default after nine months of missed payments, and for majority of private student loans you have to miss about three months of payments to put your loan into default, though this depend on the specific loan lender.

Default cause severe consequences and some of them are following:

  • Bad credit record
  • Cancellation of federal student aid eligibility
  • Additional late fees and penalties
  • Possibility of going to court
  • Potential Default
  • Cutting off of Tax Return
  • Annulment of certain repayment benefits
  • Loss of professional license
  • Incapability to join the armed forces

The best way to avoid these serious consequences is to ensure you make your payments on time.  Defaulting on federal student loans is in general worse than defaulting on private student loans owing to the fact that the government can’t take action without the court’s intervention. However, it is less possible to default on federal student loans because there is a great deal of available repayment benefits with these loan plans.

Getting Out of Default

There are different federally authorized rehabilitation programs designed to help student loan borrowers to get out of debt giving them an opportunity to bring their loans out of default. Rehabilitation can repeal negative consequences of student loan defaulting. Participation in these rehabilitation programs is granted to students who take federal student loans.

Rehabilitation program involves a number of things. A representative from Default Collections will set up a monthly repayment plan for you and must approve the monthly payment sum required to participate in this 10-month program. First, borrower must make at least nine qualifying in-time loan repayments. In the case any of payments is missed, student has to begin paying off plan for the beginning. After completing of rehabilitation agreement, the underwriter transfers the loan to a lender and servicer and the loan is considered out of default. Borrower then once more becomes eligible to get the student financial aid such as student loans, scholarships or grants. In addition, he or she is able to apply for deferment and forbearance as long as these have not been exhausted for the period of default.

How to Avoid Going Into Default

Prior to taking out a student loan you should be sure that you will be able to make your loan payments when they become due. The best thing connected to federal student loans is that you don’t have to repay it until you left the school and they come with six to nine grace period after graduation. The interest on some loans starts to accumulate when the loan is given. Keep in mind that if you don’t have a subsidized loan then you will be responsible for that interest which starts to accrue right after the loan is given. However, if you realize that you are going to fall making your payments on time, you should contact your loan provider and utilize any available deferment, forbearance or repayment-adjusted option to avoid going into delinquency which often leads into student loans default.

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Student Loans Forbearance – the Most Important Facts

Forbearance is a way of putting off paying back your loans

Educational loans for college students provided by the federal government or private lending companies are a great chance to vast majority of US students to gain higher education. Still, Loan borrowers are obligated to repay their loan debts after they graduate or fall below half-time status. It’s not unusual, however, for students to have troubles making their payments. If you find yourself unable to make your planed loan payments, but don’t qualify for a loan deferment, you may consider forbearance as most advantageous option. Forbearance is a period of time during which lender of your student loan temporarily reduces or suspends your standard payments. Forbearance allows borrower to temporarily make smaller amount of payments, extend time of making payments or stop making loan repayment for a period of time.

Student loan forbearance vs deferment

The difference from loan deferment is that deferments don’t capitalize interest that accumulates during the time borrower delays the repayment term, and forbearance does. In other words, this means that over the longer period of time forbearance will cost you more than deferment, hence it should be utilized after all of your deferment time has been exhausted. Additional dissimilarity from deferments is that you can be granted forbearance if you are already in default.

Loans Eligible for Forbearance

You can apply for forbearance if your loan is taken under following student loan programs:

• Federal Family Education Loan Program (FFELP) which includes:

  • PLUS Loans
  • Federal Direct Loans
  • Some Private Student Loans

• Consolidation Loans
• Stafford Loans
• Supplemental Loans for Students

Types of Forbearance Available:

  • General Forbearance
  • AmeriCorps Forbearance
  • Teacher Loan Forgiveness Forbearance
  • Internship/Residency Forbearance
  • Loan Debt Burden Forbearance

Who is Eligible

You can ask your loan provider for forbearance option under certain circumstances which prevent you of making regular payments, such as health issues, financial hardship, unforeseen personal problems, natural disaster, military deployment or unemployment. Under certain conditions, you can automatically be given forbearance, for example, if you are involved in military service or US guard forces.

In addition, you are eligible for student loan forbearance in the following circumstances:

How to Apply

The application process is very simple and it takes only a few steps:

  • You should download the correct forbearance form
  • Complete the form and
  • Return the completed forbearance form to your loan provider.

It’s  not a common practice for forbearance to be automatically put into effect under certain repayment plan like some deferments are, and therefore it’s good idea to make a personally forbearance request to your loan servicer if you want to utilize this option. You should contact your loan lender or lenders at least 30 days before you want your forbearance to start to allow for enough processing time. They will contact in writing of the decision made. Keep in mind that it’s important to keep making payments until your forbearance is granted and be sure to make clear with your loan servicer which student loans you would like to be put into forbearance or if you’ll prefer to make postponement of your complete loan repayments. In case you’ve borrowed from multiple lenders, you have to make a forbearance request to each of them.

Federal and Private Education Loans Forbearance

If your student loan is provided from the federal student loan plan, you should make use of forbearance offered because the federal student loans generally come with a vast amount of forbearance time.

On the other hand, forbearance time available for private student loans can differ from one loan servicer to another and it is, therefore, very important that you learn about the actual forbearance time built in to your private student loan before you accept and sign the promissory note. In addition, you should be alter to the fact that some private student loan options do not offer any forbearance or deferment time, which means that you are required to make payments while you are still  at college. That is why is of vital importance to be familiar if any forbearance time is built in to your loan in advance, as you’ll probably want at least some forbearance time available, particularly while you are still in school.

How to Utilize Forbearance

When you are prepared to utilize forbearance time for your loan repayment, you just need to contact your lender via their website, a written application or over the phone. Once you utilize your forbearance, you must keep in mind that you’ll have to make payments once again and take note of that date to prevent missing to make payments.

It is very important to make your loan payments on time every month. It cannot be denied than taking student loans is a serious financial responsibility. The best solution for successful repayment of student loan debt is to do your emergency planning ahead of time. It’s a good idea to map diverse probable settings for your student loan borrowing and repayment. As a result you will know exactly what to do in case your life circumstances after graduation aren’t exactly what you hoped they would be. Keep yourself informed about all alternative repayment options before taking a loan. Evidently, it would be the best to make your payments on time, every time. Be aware that there are serious consequences if you repeatedly skip payments. However, as a borrower, you do have options in seeking alterations in the terms of your loan. If you have difficulties to manage your student loan repayments, or, for any reasons realize that you don’t have enough money to cover all of your expenses, the best thing to do is to think about requesting forbearance on your student loan.

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10 Great Tips on How to Repay your Student Loans Quickly

Going to a college or university undeniably is a good investment. Millions of students today take federal or private student loans in order to finance their education. According to some reports, the average amount of debt a student holds upon graduation is about $20,000.

I’ve Just Graduated! What Now?

You have just graduated. You are excited and proud of yourself holding your degree in one hand. And you are worried and anxious holding your debt in another. You are starting your new life with a student loan of approximately $15,000-$20,000 and wondering how to get rid of it in the shortest period of time.

Here are some useful tips on how to repay your student loans quickly. First, let’s list a few things you should pay attention to before taking your student loan.

1. Think about the Amount of Your Loan

The golden rule is: the less money you have to borrow, the better. Try to minimize the amount you are borrowing. Keep in mind that your monthly payments shouldn’t go over 10% of your anticipated monthly income without deductions such as tax or regular expenses once you graduate. This will allow you not to hording in debts. Moreover, it will be of assistance to repay your student loans quickly.

2. Be Familiar With Your Rights and Responsibilities

Be aware that you are responsible for repaying your student loans on time even if you don’t complete your education or fail to find employment. Complete entrance counseling prior to receiving the first disbursement and exit counseling before leaving school. It answers many essential questions about student loans and explains what will happen when you fail to make payments. It can give you helpful suggestion on how to manage your student loan payments. Student loans will not be excused in a bankruptcy proceeding, so it is vital that you put effort on paying them off as quickly as possible. Be informed about your rights as a borrower.

3. Don’t Wait Until You Graduate

Start paying off your student loans while still in college, even in case this requests you to find a part-time job, because this will save much money in interest. Keep in mind that as soon you start making money, the soon you will repay your student loans and start to make your capital.

4. Develop a Plan

Build up a plan to repay your student loans within certain amount of time. Don’t set them up paying off in next 20 years. In case you have some smaller debts like credit cards, clean them all up before taking your large student loans, which will allow you to focus on your loan repayment and will save you money.

5. Control Your Career

Be sure you choose a college that can place you in job after graduation. Carefully choose your mayor and pay attention to jobs available in the labor market, companies hiring and salaries offered. Keep learning and upgrading your skills to make yourself a valuable employee. This will increase your salary and consequently, help you repay your loans quickly.

6. Check for Available Repayment Options

Before entering your student loans, you should take into consideration all repayment options accessible, since they offer different conditions of paying off. For example, Biweekly Repayment Plan allows you to pay half of your monthly payments every two weeks instead one large payment. This will reduce the time needed repay your loans. With private student loan lenders you can negotiate favorable repayment conditions and choose from different repayment options according to your finances.

7. Don’t Change Your Lifestyle After Graduating

Once you have graduated, you don’t have to change your habits. Keep living like a student, stay in your affordable apartment, and use public transport. In that way you won’t increase your cost of living. Instead, use your newly earned income to pay down the loan principal and prevent it increasing with compounding interest, since your loan is not going to start accumulating interest during the grace period.

8. Arrange Your First Job Offer

Once you have your degree, use it as soon as possible. When you settle your first job offer negotiate your salary.  You will have six months grace period after graduation (or more under PLUS loan and private student loan plans) which is intended to allow you time to find your first job before you have to make payments. As soon you start to work, soon you will start paying off your loans. However, you should contact your student loan company to ensure that you are in the grace period, since you maybe wouldn’t be automatically put into grace period.

9. Keep in Touch with Your Lender

Update every change of your address, telephone number and any other change of your personal data that may occur. Don’t ignore bills and problems related to your debt.  Failing to do that can end up costing you a bunch of money.  Open and read every paper mailed from your student loan lender or you might miss out on a important deadline or vital information you need to act on concerning your student loans. If there is information you do not understand or if you have any concerns, ask for help. Remember, it is essential to ask if things doesn’t seem clear to you to avoid any troubles with your student loans repayment.

10. Don’t Panic

If you are having difficulty making your payments because of some unexpected financial issues, unemployment or health problems, remember that diverse student loan plans offer different repayment options like deferments and forbearance, which can help to avoid delayed fees and other penalties. If you use these options, you can also prevent a negative mark showing up on your credit report. If you have any difficulty making your student loan payments contact your student loan company to give you assistance in this matter.

Different federal and private student loan plans give assistance to millions of students in order to gain their academic education. This leads to better employment opportunities, which is worth every dollar invested.  If you had to take out student loans to support your education, there is no reason why the loans should not be managed appropriately. Just be sure to be economical and find out the very best way to cope with your student loans while still in college.

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Scrutinizing Sallie Mae Student Loans

Financial Aid for Students by Sallie Mae at a Closer View

Sallie Mae or SLM Corporation (originally the Student Loan Marketing Association) is one of the largest private student loan lenders in the USA which offers a great number of loans to undergraduate, graduate and professional students. The company in the beginning provided student loans offered by the federal government under the Federal Family Education Loan Program (FFELP) but nowadays it provides private student loans and it has more than 10 million borrowers. Sallie Mae Student Loans are established in 1972 and have helped millions of people in the USA to reach their goal of a higher education since then. Today, this company is considered to be one of America’s leading private student loans providers because of its low interest rates, the flexibility of repayment, and many loan alternatives.

Sallie Mae Student Loan Options

There is a wide variety of Sallie Mae student loans offered to undergraduate, graduate and professional students and the most popular are Smart Option Student Loan (for undergraduate and graduate students), Career Training Smart Option Student Loan (for undergraduate students), residency and Relocation Loans and Bar Study Loan (for graduate students).

Smart Option Student Loan

This type of Sallie Mae student loan is their brand private student loan and it is intended to be of assistance to both, undergraduate and graduate students. Consider taking this student loan if you are looking for the best private student loan for you. Smart Option Student Loan is school-certified and has low interest rates, offers three flexible repayment options with no starting fees. Also, this Sallie Mae student loan type offers borrowing limit of 100% of cost of education with a minimum amount of $1,000. This borrowing plan is, like the other private loan options, based on credit – you need to have a good credit history in order to apply. In case of a bad credit history, you still can apply, but you need to have a creditworthy cosigner. At present, Smart Option Student Loan has APRs from 2.25% to 9.37%, depending on the borrower’s and cosigner’s credit score.

Career Training Smart Option Student

This loan plan is similar to the standard Smart Option Student Loan with only exception that student must be enrolled in a qualified degree program to be eligible. You are permitted to make interest-only payments during your time in school so as to reduce your payment amount when the definite repayment period begins after you graduate.

Residency and Relocation Loan

The Sallie Mae Residency and Relocation loan is a private educational loan introduced with an intention to help students enrolled in their last of either medical or medical school to pay for academic expenses. To be eligible for this loan you must be enrolled at a qualified medical, dental school or in final year of your studies. Minimum amount that you can borrow at start is $1,000 and go up to $15,000. Which is advantageous is the fact that you aren’t required to make payments while you are still attending school. Another great thing about this borrowing plan is that it can cover nearly any cost associated to school training programs as well as expenses related to traveling to interviews for residences and relocation costs.

Bar Study Loan

This student loan plan is designated to assist students who are enrolled in their last year of law school in paying for all the expenses associated to attending the final law school and especially the costs related to studying for the BAR exam. To qualify for the Sallie Mae Bar Student Loan, you must be enrolled in final year of the study at an ABA-accredited law school or have recently graduated. In addition, you must take the BAR exam no later than twelve months after you graduate. Loan amounts start at $1,000 and goes up to $15,000.

Sallie Mae Student Loans Repayment Options

There are several repayment plans offered under this private student loan like following:

  • the Fixed Repayment option which obliges you to pay just $25 on monthly bases while you are in school and can enable you to save more than 20% on the total cost of your student loan compared to the cost of the loan with deferred payments;
  • the Interest Repayment plan is a great option for those who can afford to make interest payments while still in school, which can enable you to save more than 25% on the total cost of your student loan compared to the cost of the loan with deferred payments;
  • Deferred Repayment plan is the best solution for those students who are not able to repay their loan while in school, since it allows borrower to defer all payments after graduation.

Sallie Mae Student Loans Outline

All above mentioned favorable conditions related to this type of private student loan, like diverse loan options, flexible repayment conditions, the low interest rates, make Sallie Mae Student Loans a leader in private student loans. However, it is recommendable to explore the numerous other borrowing options like Federal Student Loans, college scholarships and grants and other types of financial aid for students before you apply.

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Factors to Consider Before Applying for a Student Loan

Different Student Loans Programs

In developed world today the job market is very competitive and going to college or university increases a person’s chances to gain better employment opportunities after graduating.  A large number of students decide to take a student loan in order to invest in their studies. There are numerous student loans programs nowadays that are intended to financially assist students to pay for their academic expenses. Student loans repayment generally begins from six to twelve months after a student leaves school. Different student loan plans offer diverse terms and conditions as well as specific requirements.  Here is some useful information to figure it out what are the best student loan plans accessible today and how to successfully manage with loan repayment. Some of the most popular available student loan options are Federal Stafford Loans, Federal Student Loans, Federal Plus Loans, Federal Perkins Loans and Private Student Loans.

The Best Student Loans

Federal Stafford Loans

Federal Stafford Loans are fixed-rate student loans for undergraduate and graduate students attending college at least on half-time basis.

Federal Stafford Loans include following types of plans:

  • Direct Subsidized Loans for students in financial need, free of interest charge during the time in school and during grace period and deferment periods.
  • Direct Unsubsidized Loans which are not based on financial need. You can choose to pay the interest while you are in school and during grace and deferment periods or to let it to be added to the main amount of your loan, which will, of course increase the total amount you have to pay off.

The major benefits of this loan plan are low fixed interest rate of 3.40%, increased borrowing limit- up to $20,500 per year and exemption of repayment while student is enrolled in school – repayment begins six to twelve months after graduation. To qualify for Federal Stafford loan program, you must be a U.S. citizen or national, a U.S. permanent resident or eligible non-resident attending a school that participates in Federal Family Education Loan Program and be enrolled in school at least half-time. Federal Stafford borrowers can qualify for the teacher loan forgiveness program if they teach in designated “low-income” schools.

Direct Federal Student Loans

Direct Federal Student Loans are low-interest loans for students. The lender is the Department of education of the U.S.A. With this loan program you borrow money directly from the federal government and have online access to your direct loan account. You are also able to choose from numerous repayment plans. Moreover, you can switch repayment plan if you want. Federal loan program offers the following types of loans:

  • Subsidized for students with proven financial need. These loans are with no interest rate while student is in school, as well as during the grace period and deferment periods.
  • Unsubsidized which are not based on financial need, with interest of 6.8% charged during all periods, including time in school, grace and deferment periods.
  • PLUS unsubsidized loans for the parents of dependent students and for graduate and professional students. Interest is charged during all periods. To qualify for this loan, the parent borrower must be the biological or adoptive parent of the student; must not have a bad credit history; the student must be enrolled at least half-time at a school participating in the Direct Loan Program; the parent and student must be U.S. citizens or eligible noncitizens.

Federal Perkins Loans

Federal Perkins Loan program provides fixed low-interest loans with interest rate of 5% for students who are attending one of participating postsecondary institutions. Students are required to fill FAFSA or Free Application for Federal Student Aid and a Perkins promissory note in order to receive the loan. Duration of repayment period is ten years and the grace period is nine months.

Private Student Loans

Private Student Loans can either complement or replace federal loans such as Stafford loans, Federal Plus loans and Perkins loans. This loan plan is good borrowing option for students who either cannot or don’t want to borrow the money from government programs. Take into account, that when you choose to acquire the Private student loan interest rates can be to some extent higher than with other loan options.

Important To Know

Before taking an academic loan it is very important to be familiar with some essential facts about this type of credit. The much you know about the loan you are going to get involved with, the greater are chances to choose the best student borrowing plan and to repay it easier when the time comes. Here are some useful guidelines to help you with your student loan.

  • In case you decide to attain a student loan online, make sure that the lender you are dealing with is legal, since there are many Internet frauds related to student loans. You can do it by checking the company’s homepage for an address or a landline telephone or, even better, check it with the Better Business Bureau (BBB). In addition, you should search for any reviews available online.
  • Never bond yourself to just one loan plan. Get together a few of loan proposals, compare their terms and conditions and choose one that meets your needs the best.
  • Electronic banking services are very convenient because they enable you to access your money quickly and in the easiest way. Get information on whether or not your eventual lender takes part in electronic banking process and whether you will be able to receive your money to your bank account electronically which will let you avoid a hassle with loans sent via paper checks mailed to your college, which is something that some lenders do.
  • Before applying, make sure that you are aware of all parties involved in the loan process. It may be the case that your potential  lender  uses a service company to take care of the administration of your student loan, which means that taking a loan from that lender may involve paying off the money back to the service as well.

What Are Your Options?

Student loans are created to help students to invest in their education; nevertheless, it can cause numerous troubles if they are not paid in the right way. To avoid going into a huge debt and financial crises, you must be aware of some important issues before applying for a student loan. We strongly recommend to students who intend to borrow academic loan to get as many information as they can on most important questions related to student loans. First, you need to ask yourself a few vital questions.

Can I Afford to Get Involved With Student Loan?

Always be aware of the fact that you are going to make monthly repayments of your student debt, so you need to be sure that you have enough money and that you will be able to make these payments. The best way to secure yourself is to have some savings to cover a few repayments in case the some financial problems occur, e.g. you lose your job or have some unexpected expenses. If your monthly payment overcomes your budget, you will go into the risk of increasing your debts by for instance, using you credit cards to repay the student loan.

Am I prepared for a long-term debt?

You should take into consideration that you are going to be involved with loans for a long period of time and ask yourself will you be capable to handle this. Think about your loan and your options carefully before you apply for it.

Am I informed about the policies or terms of the lender properly?

Never sign any contract without being one hundred percent sure that you understand all the terms and conditions. You have to choose a good plan that will help you to handle your loans. Try to find the best lender who will offer you the best borrowing conditions.

Here are some things you should pay attention to when looking for the best lender.

  •  Focus on Interest Rates

This is something you should take into consideration at first place. Interest rates could significantly vary and you should pay attention to interest rates and the lengths of the repayment offered by diverse lenders and choose borrowing deal very carefully. Furthermore, you should consider that the lower interest rates have longer terms.

  •  Check for Unseen Fees

Always read the contract carefully before signing it. Don’t hesitate to ask questions about anything that seems confusing because it is something that will help you to uncover hidden charges. Ask for help someone who is familiar with this matter to be sure you are making the right decision.

  •  Check Different Rates

There are two kinds of rates, the flexible rate and the fixed rate. The first one changes depending on the situation of the financial system. Quite the opposite, the fixed rate remains the same for the all repaying period, which is good because you know exact amount you are going to pay.

Student loans are helping a large number of students today to gain academic education and invest in their professional future. Although they are undoubtedly helpful, you should be careful and aware of their downsides if aren’t used properly. So, if you find that you need a student loan, consider all the above mentioned factors before closing a deal with your lender.

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Defining Uncertified Student Loans

Uncertified student loans, also referred to as direct-to-consumer education loans (DTC loans), are private loans that do not require confirmation from the college in order to be approved. With these loans, the college or university does not need to be aware of the fact that you are looking for more financial assistance.

If you have a Pell Grant or other type of federal loan, it might not be adequate to cover all of your entire expenses, so you would need to apply for a private student loan. You will need money for tuition, books, room, computer and other fees that might be involved. If you apply for a certified loan, the college needs to verify the amount of the loan; however, with non certified student loans, the college does not need to confirm the amount. All of the money must be repaid after college, so do not borrow more than the cost of the education.

Finding uncertified student loans can be difficult. The availability of these loans has declined during the struggling economy. College students were taking out student loans and then using the money for other reasons; therefore, they would eventually default on the loan. As a result, these types of loans are not as widely available.

In order to find a lender who will provide non-certified student loans, you might try searching online. Wells Fargo and Chase are the two most popular lenders offering these types of loans. No documents are sent to the college, and you will not be observed to see where you spend the money. All the lenders care about is whether you make your payments on time.

Be careful about applying for non-certified student loans with lenders online. Some lenders are not legitimate, and they will charge you large interest rates. You need to make sure the lender you choose is reputable, or you could end up in further debt. It is always wise to check with the Better Business Bureau before applying for a loan.

Lenders will mainly look at your credit score before approving you of a loan. You need to have a good credit score, strong income and good credit history. If your credit profile is not great, you might consider having a creditworthy co-signer for the loan. If you obtain student loans without a cosigner, you need to have a good credit score, clean credit history and be able to prove to the lender that you can repay the loan, a solid employment history is an important fact that the lender probably will consider. If you are approved, the money should be sent straight to your address. In order to obtain non-certified school loans, the school does not need to be notified in order for you to have access to the funds.

With uncertified loans, the interest rates are affordable, and the terms of repayment are flexible. In addition, you can normally borrow more money with these types of loans, and you are not required to pay the money back while you are in school.

The main difference in an uncertified student loan and a private education loan is that you do not need verification from the school. However, because people have taken advantage of these education loans, availability has decreased. If you would like to apply for an uncertified education loan, you need to search around for lenders who can provide you with a loan. College is very expensive and in particular medical schools or law universities, so a loan can help you be able to afford higher education.

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How To Get Private Student Loans Without Cosigner

Many studies have shown that individuals with a college degree earn much more money over their lifetimes than individuals with only a high school degree. Because of this fact, many people who want to earn more money go to college to get a degree. While attending college can provide you with a valuable education, it is definitely not free for most people. Although a few people qualify for scholarships and grants, the majority of people have to pay for their educational needs.

Student Loans

Since you are most likely going to have to pay for at least part of your college education, you may need to borrow money at some point. When you Peterborough money to pay for college, student loans can provide you with the cash that you need. There are two different types of student loans that you could pursue. One type is the federal student loan. These loans are issued by lenders that are backed by the federal government. The government sets the interest rates on these loans and even subsidizes some of them based on financial need. These loans are not based on your credit and pretty much anyone can get them even if they don’t have any income.

The second type of loan is the private student loan. Private student loans are loans that are issued by individual lenders and are not backed by the government. These loans are also not subsidized by the government and they are a little more difficult to get.

Qualifying for Private Student Loans

Most people seek out federal education loans first because they are easier to qualify for and they have lower interest rates. After you use a federal student loan to pay for the majority of your college, you may need to borrow additional money in the form of private student loans.

When you need to qualify for these private student loans, the lender will need to evaluate your credit. Many people in this situation use a responsible cosigner, such as a parent, to sign the loan application. This can increase the odds of getting approved for a loan, but it is not always necessary.

If you want to qualify for a privet student loans with no cosigner, you will have to prove that your credit profile is sufficient and creditworthy to justify getting the money you need. In addition, you will also need to prove that you have enough and strong income coming in on a regular basis if you want to get approved with no cosigner on the loan or a co-borrower.

Qualifying for a loan with no cosigner is not always easy when you are trying to go to college. For example, if you are a full-time student, you may not be able to earn very much money in addition to studying and attending class. If you want to qualify for the loan, however, you will need to be able to prove that you have enough income or assets to qualify. If your credit score is not yet high enough, you may also need to take the necessary steps to bump up your credit score a bit. This may delay your ability to qualify for a private education loan.

Interest Rates

When you are in the market for this type of loan, you should consider shopping around a bit before you just settle on the first loan that comes along. Otherwise, you can be sure that you’re getting the best interest rate that is available in the market. When you’re picking federal loans, you can be sure that you’re getting the best interest rate, because they are basically all the same. Once you venture into the private market, the rates can vary a lot more.

Other Options

If you are having a hard time qualifying for a private student loan, you may need to consider some alternatives. Using a home-equity loan, a personal loan or a loan from a family member might provide you with the money you need.

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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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Getting Private Student Loans to Finance Education

An Introduction to Private student loans

Private student Loans are great loan option to be considered when you cannot obtain other forms of financial aid. Private student loans are financial resource designed to help you pay all expenses of your education and very helpful way to complement your federal student loan. Private student loans are credit-based financial support which you can use to pay any academic costs like tuition, books, room, school fees, transportation and other expenses. Moreover, private loans help you pay additional costs that are not covered by federal financial aid. What makes it different from other student financial aid that the private loan can cover up to the total cost of your education and that in most cases you need to have a cosigner on your application (in that case your interest rate will be calculated based on your credit and your cosigner’s credit). Also, private student loans require a credit check for the primary borrower.

Private Student Loan Benefits

The major advantage of Private Student Loan Plan is flexibility. Private loans give you the elasticity to apply whenever you need financial help during your time at school. Other important benefit is that any creditworthy borrower is eligible to apply for the loan get loan, in contrast to federal loans that are mainly based on financial need (excluding PLUS loan) and student’s status. In addition, this type of loan gives you opportunity to pay for extra costs like transportation, computer, books and other charges. Diverse private loan lenders offer different terms and conditions. We recommend that you discuss these terms and conditions with your lender before signing a contract. Also, ask for benefits and discounts that private lenders offer, since different companies offer different benefits and discounts.

Eligibility Credit Requirements

In order to qualify for private student loan you must be enrolled at least half-time at an eligible school. In addition, you have to be the U.S. citizen or Permanent Resident and your cosigner and you need to have social security number and pass accredit check.

Length of the Process

Usually you should allow 6 to 8 weeks after the application for your school to receive your loan funds.

Private Student Loan Interest Rate

Interest rates under private student loans are calculated based on a published index such as London Interbank Offering Rate (LIBOR) plus extend based on your credit history and score. In case that cosigner is required, your interest rate will be calculated based on your credit and your cosigner’s credit. Since the interest rate is variable, it will oscillate over time.

The best private student loans have interest rates of LIBOR + 2.0% or PRIME – 0.50% with no fees. Unfortunately, these rates often are available to applicants with great credit history and a creditworthy cosigner. If you want to get approved with no cosigner on the loan, you need to prove that you have enough and secure income coming in on a regular basis.

Repayment plans

We strongly recommend that you carefully consider all available loan repayment options when applying for a private student loan.

There are numerous beneficial loan repayment plans offered by different lenders. You should keep informed about these budget friendly repayment options to make your private student loan repayments easier. These repayment plans include full loan deferral, interest only repayment, immediate interest and principle repayment.

Full Deferral

Payment of principal interest starts six months after student lefts school, there is no interest payments during enrollment in school. Interest will continue to accumulate during the deferment period and will be added to the loan at the time of private student loan repayment.

Interest Only

While you are enrolled in school up to four successive years you are going to pay only accrued interest. Principal interest repayments will begin 45 days after graduation.

Immediate Repayment

Payment of principal and interest will begin instantly after the loan is completely paid out.

As a general rule, you should apply for a private student loan only if you have failed to obtain federal student loans or other types of financial aid for students like college scholarships, grants or work-study aid. If you are looking for more flexible financial aid to cover your education expenses you can apply for an uncertified student loan, you can borrow more money because the loan limit is much higher than certified education loans and without any authorization from your college.

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Student Loans and What You Should Know

An Introduction to Educational Loans

With rising expenses of education today, a great number of students reach for different types of financial aid to invest in their studies. One of the most popular financial supports to college and university students are student loans. Different from college scholarships and grants which you don’t have to return, student loans are repayable, which means that you have to pay it off during your time at school or after you finish it. Bear in mind that whatever amount of loan you borrow, you will have to return it with interest. In the most cases, there is a grace period of six months after student finishes college and repayment of student loan starts after that period, no matter of you graduated or not. Usually you have ten to twenty five years to repay your loan, depending on the plan you have chosen.

The most popular student loan plans among students are federal loans, which are supported by the government and therefore have better terms and conditions such lower interest rates and more flexible repayment options. In addition to federal loan programs, there are different private student loan plans which have slightly higher interest rates, but represent a good option for students who cannot accomplish student loan for federal government programs.

In order to help you choose the best student loan plan, here are some general information about different student loan programs and repayment options.

Different Student Loan Plans

As it was mentioned before, very popular amongst students are low-interest direct federal loans. The lender is the U.S. Department of Education. You borrow money directly from the federal government and sign only one contract. Furthermore, you can choose between different loan repayment options and you can change your plan at any time if you need to, you just have to contact your loan servicer. Also, you always have online access to your loan account.

Direct Federal Student Loans

Direct Federal Student Loans offer next three types of loans:

  • Subsidized with no interest while student is in school as well as during grace and deferment periods, intended for students with verified financial need;
  • Unsubsidized loans with interest rate of 6.8% charged;
  • PLUS unsubsidized loans with interest charged while student is in school, which are intended for the parents of dependent students and for graduate and professional students.

Federal Stafford Loans

Stafford Loans are fixed-rate student loans with interest of 3.40% for undergraduate and graduate students attending college at least on half-time basis. This type of student loan has fixed interest rate and it’s intended for undergraduate and graduate students who attend school at least as half-time students. Similar as the the previous plan, Direct Federal Stafford Loan plan also offers subsidized and unsubsidized loans.

Federal Perkins Loans

This loan program has fixed low-interest rate of 5% for college and university students. If you choose this plan, you will enjoy nine months grace period and will repay your loan in shorter period of time, because repayment period with this loan option is ten years.

Consolidated Student Loans

With this plan you can replace multiple loans with just one, which can make your loan more affordable.

Private Student Loans

Private loan programs can substitute or work together with federal loans and they vary in terms and conditions. To choose the best borrowing plan, you should consider it all very carefully and get as many information on their rates, terms and condition as it is possible.

You can apply for federal student loan by completing the Free Application for Federal Student Aid, or FAFSA. Furthermore, you need to collect all the documents required, submit a FAFSA online, and remember that this process is free. After processing your FAFSA, your results will be sent to schools you listed on your application and you will get a Student Loan Report.  Under some particular conditions, federal loans have student loan forgiveness option.

Repayment options

With different student loan plans you can choose between a number of available repayment options. Some of they are:

  • Standard repayment plan has fixed monthly payments up to ten years. If you do not choose other repayment plan when apply for the loan, your loan servicer will place you onto this payment plan. This is also the plan the most of the borrowers choose to stay with.
  • Income based repayment follows your income: as your salary rises, so does your repayment amount.
  • Biweekly Repayment Plan offers you to pay half of your monthly payments every two weeks.
  • Extended Repayment which allows you to enlarge your repayment for almost thirty years. But, in that way you are going to pay much more in interest.

There is no doubt that student loans can be very helpful investment in your future, still, you should be aware that taking this loan is a serious responsibility as well, so be sure that you will be able to manage it.

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