Student loans College is not cheap. Although there are many ways to pay for the education it usually involves some form of loan. The best ones are from parents because the payback time and interest rates are always much better. Since this source is not always available, the federal government has a program that will. This is the federal student loan program. The most popular federal student loan program is the Sallie Mae fund. This program arranges loan through private institutions at a much lower interest rate than is otherwise charged. Application is usually done through the financial aid office of the schools. The amounts lent are based upon the applicant's financial needs as well as the fees and tuitions charged at the educational institution. This loan, like most grants and scholarships takes into account both the student and his families financial liabilities. Most of the loans of this type are paid directly to the schools. Once the school has deducted the tuition and fees, a check is given to the student for the purchase of books and other supplies necessary. Other sources of loans are banks and credit unions. These are private institutions and will base the amount of the loan upon the person's credit rating. Some of requirements may include collateral to ensure payback. One of the most common forms of this collateral is a second mortgage. For young borrowers, many financial institutions will require a parent or guardian to co-sign the loan. The terms of most of these loans signify that payback is to start upon graduation or after a six-month grace period from graduation. Should the student decide to go on to an advanced degree, most loans will be again deferred until the degree is obtained or other arrangements are made. These requirements will vary from institution to institution. What are student loans? There is a myth that only the rich can afford to get a college education. This could not be further from the truth. The sad truth is that in today's highly technical and fast paced society, a college education is a vital necessity. Even the simplest of tasks is becoming computerized to a point that it takes specialized training to operate the equipment. By the time most middle and high school children reach graduation, even a janitors position will be in need of a two or four year degree. When one mentions a college education the first thought is some big foreboding university and four years of either drudgery or partying. There are, however many new fields of study opening up that require only an Associates degree. But, even though these are earned at community colleges, there are still expenses to be paid. Most of the two year programs are at colleges that are accredited. This accreditation allows students to apply for the same grants, scholarships and loans that would be applicable to the four-year institutions. Student loans are monies that are borrowed at a lower interest rate than traditional loans. Many of the requirements for loans other than college require good credit ratings and often some form of security. A student loan is the only loan one can get that does not required the person to be gainfully employed. The repayment period is also not started until the person completes their education or leaves school for any other reason. There is an automatic six-month grace period. Depending upon the type of loan the interest may or may not accumulate from the release of the funds. Some of the loans go directly to the college or educational institution and others are awarded to the student directly. Applying for a student loan The student loan application process is not as difficult as it sounds. Although it can be done through a bank or credit union, it is best to do it directly from the educational institution. Once the application for admission is accepted, the next step is at the financial aid office. The personnel know the most direct and simplest methods of securing funds. When the aid request is sent directly from the school, the letterhead ensures the quickest response. Once a person has an acceptance letter, the financial aid office can offer a list of various sources to pay for the education. Prior to entering this office, be sure to have as much of the background paperwork with you. These include your tax returns for the previous year as well as those of your parents. A parent or guardians income is usually considered unless the student is married or has been living separately for a period of time exceeding twelve months. Three primary factors will determine the path decided upon for securing funds. These are; student's status, financial needs, and grade point from high school. The student's status refers to full or part-time. The course of study also comes into play because of special fees associated with certain scholastic paths such as lab or equipment needs. A prospective students high school grade point will help determine the student's eligibility for grants and scholarships. The financial needs will consider the prospective student as well as parents and/or spousal income as well. For any form of financial aid, ensure enough time is allowed for a response. Most institutions suggest at least an eight-week lead-time. The earlier one applies, the better the chances of securing the necessary funds in time to start class at the beginning of the semester. How to apply for a student loan There are many factors to consider before applying for a student loan. Among these are how much is available in savings or other non-loan areas. Are you going to receive any scholarships? Is the educational institution accredited? Will you be going full time or only taking one or two classes? Make a list of the expenses for each semester. Will you be living on campus or commuting? Allow enough money to purchase books, food, clothing, and other basic supplies. Once those criteria have been established, you must allow yourself plenty of time to complete the process. Before even considering loans or grants, you must have received an acceptance letter from the educational institution of your choice. Once that has been accomplished, it is best to visit the school in person and make the acquaintance of the financial aid office. However, that is not always an option. The second step, once an acceptance letter is received and returned is to fill out the FAFSA or Financial Application For Student Aid. Most financial aid offices will help in filling out this form and sending it to the correct address. While awaiting the results from this, explore the possibilities of various grants and scholarships that are available. Again, the financial aid office will help determining the availabilities of these. The FAFSA will generate a SAR or Student Aid Report. Use this form in conjunction with grants, scholarships and other financial awards to calculate the amount of money that will need to be borrowed to ensure payment of the educational credits. If you are planning on working while attending school, these funds can be used to offset the total repayment amounts. However, the lending institutions will use these monies to determine the loan amounts available for subsequent semesters. Other types of student loans Not all loans for college are obvious. There are two sources for financial aid that are often overlooked. Each of these will be discussed in more detail below. Parents tend to plan their children's future well before the child is even born. Although mom and dad just know their child will be a genius and will be offered full scholarships, they also try to be ready just in case that isn't quite the case. To that end, many parents will have life insurance and annuity plans in place that will mature in time for their offspring to take advantage of the financial rewards. By taking out a permanent life insurance plan, it can be paid for in a certain number of years. This type of insurance can then be cashed in and the payout can be applied to the child's educational needs. Parents will also cash in this type of policy and invest it in an interest bearing account thus allowing for a growth fund that will grow as the child ages. As with retirement funds below, some companies allow loans against the face value of the policies that can then be applied to educational expenses. One or both parents may also set up a retirement fund, such as a 401k. After a period of years, these monies can be taken out, pre-tax and applied to a child's education. Some company retirement funds allow the employee to just borrow against the fund for educational purposes. For tax purposes the Roth plan is also a possibility. To get a clearer picture of how either of these is best used, one should consult a tax professional. By knowing ahead of time the ultimate purpose of this plan, the professional can help direct the individual into setting up the proper deductions. Scholarship Scams In today's mass-market media world, everybody is trying to get something for nothing. One very old saying says to never look a gift horse in the mouth. This is as true today as it was when it was first coined. Whenever something is offered for free, there is almost always a catch to it. Granted there are many free grants and scholarships available, but if something doesn't look quite right, investigate thoroughly before signing on the dotted line. Some of the things to look for include hidden fees and up-front monies to be paid. Among the junk mail are letters that look legitimate but are in fact a scheme to con a person into paying for something that is nothing more than a scam. Some of these are obvious uses of a legitimate fund name but with one or two letters changed. By reading the text of the letter and the fine print it is usually easy to spot the phony offers. However, if there are any questions, have the school financial aid officers look it over. There is a book published each year listing available scholarships. Students with less than stellar academic records are easy targets. Offers that state things such as 'First come, first served' are never true. This kind of deadline may be true for furniture sales, but never true for scholarships. Another favorite line is "You've won!" If you have not applied for this scholarship, you cannot just win it. A scholarship must be applied for. These two types of scams almost invariably ask for credit card information for verification, or a bank account number to hold the winnings. This is never asked for with legitimate scholarship grants. One other catch phrase to watch for is "It's guaranteed". A scholarship search cannot guarantee getting a person scholarship money. Scholarships an alternative to student loans A scholarship is money given to pay or offset school expenses and lower the number of student loans you need. The amounts can range from only a few dollars to an all expenses type. This latter one is often referred to as a full ride. The counseling offices of most high schools will have a book that lists the more common scholarships available. Below are descriptions of some of the most often used sources. Many companies offer scholarships through the local school systems. This is a way for a company to encourage students to study subjects applicable to that companies business. Some of these scholarships are free but others have a stipulation of working for that particular business upon successful completion of studies. This is a type of student loan, as you need to repay it by working off the debt. Minority groups encourage members of that particular minority by offering money for education. Other groups specify that it is designed for women or of a particular faith. Scholarships of this nature usually do not define the subject matter to be studied. Local universities often court outstanding athletes by having their abilities tied to the scholarship. These students receive the money but are expected to also use their athletic talents at the school offering the award. This is also a type of student loan, with the payment being performance in the sport. . Most of the scholarships discussed here are offered at the high school level. Talent scouts notice good athletes and companies and minority groups maintain close ties to many schools. This community involvement helps to ensure a vital workforce and top-notch sports teams. Keep in mind that, while actual money may not be needed in return, many of these are student loans requiring payment in some form. Pell Grants There are ways you can lessen the amount of student loans you need. Once you are accepted at an accredited university, college, or community college, talk to the financial aid department. There are several scholarships and grants that are based on income and may make it possible not to need as high a student loan. The Pell grant is one of the federal programs most schools automatically file for students. The maximum award is over four thousand dollars. However, not all students will get the maximum amount. Many factors are considered when a student applies. With few exceptions, a part time student must be carrying at least a half time load. Another factor that is considered is the actual college costs for both tuition and books. Unlike a student loan, a Pell grant is just that, a grant. It is never repaid. It is up to the individual institution as to how the money is applied. You may either receive a check or have it applied directly to your school expenses. The various options will be discussed between the student and financial aid officer. Federal law required payments to be made a minimum of twice per academic year. Another issue to consider when applying for a Pell grant is the type of institution. State colleges and universities are often less expensive than private colleges. Pell grants are available to Universities, private colleges and community colleges. The community college system is often the least expensive and can be used to earn Associate degrees and have many of the credits then be applied to a four-year institution. By using the Pell grant to pay many of these expenses the student can thus earn a degree that can be used to secure employment that can then be applied to the continuing education process. Stafford loans One of the primary sources for student loans is the federal government. These are called Stafford loans. There are two types, direct and FFEL. These differ in a number of respects and have the same eligibility requirements. The major differences are how the loans are repaid and the needs. The direct student loan program receives its funds from the federal government. The FFEL uses private lenders such as banks and credit unions for funding. Not all private lenders participate in the FFEL program. The repayment options also depend upon which institution is used and their particular requirements. There are two types of loans, subsidized, and unsubsidized. A subsidized loan is based on financial need. The federal government subsidizes the interest on these loans. This interest does not get applied during the period prior to repayment or during authorized repayment periods. An unsubsidized loan is available to almost anyone. These loans have the interest start to accrue from the moment the loan is authorized until the loan is paid in full. In addition these loans can be capitalized. This means that the interest will be added to the principle and the interest will then be applied to this higher amount. To keep this at a minimum, it is suggested that at least the interest be paid as it accumulates. The amount of money available is dependent upon whether you are a full time or half time student. No Stafford loans are available to students who are enrolled for less than one third of an academic year. Your financial aid department will assist in determining the amount of money available. Both the direct and FFEL loans are in addition to other monetary sources such as grants and scholarships. Because these are interest-accumulating loans it is best to consider any available grants, gifts or scholarships first and then base the loan upon the remaining balance. FAFSA FAFSA is Free Application For Student Aid. This is the first step in all applications for establishing a person's eligibility for federal or private loans. Federal loans are called Stafford loans and will be covered separately. There is a minimum eight-week turn around time so application must be made early. This procedure must be completed online at HYPERLINK "http://www.fafsa.ed.gov" www.fafsa.ed.gov. Once this has been completed it will generate a form called the SAR or Student Aid Report. If you do not include an email address on your FAFSA application the SAR report will be sent to the postal address indicated. Some institutions, such as foreign country institutions require the full eight-page SAR and this must be sent to a postal address. Once the SAR has been received, the student is then free to select the financial institution to secure the loan. To ensure a person understands the entire process of filling out a FAFSA, a trip to the library may be in order. Check with the librarian for directions to start the search. By doing the research up front many of the more common pitfalls can be avoided. As you work through the search process, you may likely discover sources heretofore-unknown companies and businesses that offer student loans. Some of the larger libraries may even have a computer section where you can file the FAFSA application. The FAFSA process will also list the state resources and funds available. Often these sources are overlooked. There are state student loan agencies that are available but too often the prospective student doesn't even know they exist. By using the FAFSA process, all available resources are thus listed. Because this is a lengthy process and the loan application is also at times lengthy, one should start as early as possible to ensure compliance in time for classes to begin. Reducing the Amount You Need for a Student Loan While you may not be able avoid taking out a loan for college, here are six tips to help minimize the cost of your college education. * Choose an affordable school. Quality of education is not directly related to the cost of education. State schools are partially funded by the government, so they are often less expensive. * Most state schools offer greatly reduced rates for residents. Depending on what is required to establish residency, it might be work moving before starting college in order to get the less expensive tuition. * Take a summer job. If you can find a job that is related to your area of study, it will not only help you financially, but help make you a better student as well. * Look for scholarships. Many scholarship programs have been cut back in recent years, but there is still money available. Check with your financial aid department. Also check with your professors. They often know of scholarships that are handled on a departmental level instead of through financial aid. * Try to get a job tutoring. Work study usually isn't at a very high pay rate, but getting paid to teach your favorite subject will often make you a better student while giving you some extra money for expenses. * Consider the total cost. Don't just look at the cost of tuition when evaluating a school. Keep in mind other factors. If a nearby school would enable you to live at home, it might be much less expensive than a distant school with cheaper tuition. * Consolidate college debt. Once you've graduated look for programs that will let you consolidate any debt that you have at a low interest rate. This will allow you to put more money toward the principle and pay it off quickly Staying Out of Trouble With Student Loans Once you graduate and find a job, the reality of paying back your student loans hits. Below are some steps you can take to help keep the payments from causing you heartache. The first rule is to stick to a payment plan. Set aside a certain amount every month for your loan payment. Making a larger payment than required each month can help you pay back the loan sooner, thereby saving you a great deal of money on interest. If you think you may "forget", set it so the payment is electronically transferred each month. Though interest rates of student loans are low compared to credit cards and other loans, it's still a frustrating reality to deal with. But there is hope, if you're making under $65,000 on your own or less than $130,000 if filing jointly you can deduct up to $2,500 of the yearly interest you're paying on your student loan. If you're simply can't come up with your monthly payment, there are options. Since your salary is only going to grow as you climb the corporate ladder, you can schedule graduated repayment plans with your lender. You start with a low monthly payment that will gradually get larger over the term of your loan. If you're absolutely out of options, you might be able to temporarily suspend your payments. If you lose your job or go back to school for an advanced degree, you can request a deferment of your loan payments. If your request is granted and you have a Stafford loan, the government will actually take care of the interest that accrues during your deferment. If you can't get a deferment, try forbearance. You can suspend payments for up to a year, though you'll still be responsible for the built up interest. Student Loans for Graduate Students For those who want to continue their education into the post-graduate level, there are still loan options available. The biggest ones are the same as undergraduate loans, the Perkins and Stafford Loans. Another resource is to look to private organizations for graduate loans. Below is a brief summary of the loans available to graduate students. GOVERNMENT GRADUATE LOANS Government graduate loans differ from undergraduate loans really in name only. So just like undergraduates, graduates have the opportunity to get a Perkins or Stafford loan from the government. 1) Perkins Graduate loan A Perkins graduate loan is available to students who demonstrate financial hardship. It has an interest rate of only 5 percent and can finance up to $4,000 of the graduate student's education. For graduate students who are adversely limited economically, the Perkins loan is one of the best options. 2) Stafford Graduate Loan Stafford graduate loans are available to any graduate student regardless of their financial situation. Two types of Stafford graduate loans exist: subsidized and unsubsidized. The difference between the two types lies in who pays the interest. For subsidized Stafford graduate loans, the government pays the interest. Students pay for the interest in unsubsidized Stafford graduate loans, though there is the option of not having to make payments until after graduation. To apply for either the Perkins or Stafford graduate loans, one must submit a FAFSA form to the government. When the form has been processed the government will send a SAR (Student Aide Report). This will give further instructions on how to apply for these loans.
ALTERNATIVE GRADUATE LOANS Alternative graduate loans, also known as private graduate loans, are loans funded by non-governmental entities. Companies offering these loans could be banks, credit card agencies or any other enterprise interested in helping graduate students secure student loans. Department of Education Direct Student Loans There is a little known option available to students who need financial assistance. This is a direct loan available from the Department of Education. You can obtain an application by either calling the Department of Education or going online. Doing a Google search will bring you to their website. From there, you can get all the information you need to apply. You can apply for two different types of direct loans -- subsidized and unsubsidized. A subsidized direct loan means that the amount of credit you receive is based on the tuition you need. As long as you are in school, you will not be required to make a payment and you will not be charged interest. This is the best option. An unsubsidized direct loan means that there is a limit to the amount of money you can borrow. With an unsubsidized loan, the amount that you require is not taken into consideration. There is considerable interest charged to both these types of credits that you will be responsible for paying. Loan Amount Restrictions The maximum amount for a subsidized loan varies depends on what year you are in college. An undergraduate can receive a maximum of $2,625, and the maximum you can receive on an unsubsidized loan is $4,000. For the second year of college the maximum increases to $3,500 for a subsidized direct loan and $5,000 for an unsubsidized loan. For the remaining years that you are in college, a subsidized loan remains at $5,500. The limit for an unsubsidized direct loan does not increase for the remaining years. If you are a Graduate or professional student, the maximum you can borrow on a subsidized loan is $8,500 per academic year. Graduate and professional students who apply for an unsubsidized direct loan can borrow up to $10,000 per year. Private Student Loans Federal student loans are based on both income and availability. What happens if you can't afford college yet don't qualify? An alternative choice for you or your parents is a private student loan. These are loans done through private lenders instead of the government. The advantage of these types of direct student loans is that they have many of the same kinds of benefits as federal loans. These loans can be used for any and all college expenses. Things like tuition, books, supplies, computers, and living expenses are all things that qualify for private student loan funds. These loans are unsecured, meaning that no collateral is needed. The loans are credit-based instead. This can mean that you might need a co-signer if you have not established a credit history. A private education loan is usually a low-interest loan. The money can be delivered in as little as five days, and the money is given to you instead of the school. You are then responsible for paying for their various educational expenses. This kind of loan has other advantages similar to federal loans. The interest and principal payments can be deferred until you graduate from school. For most of these loans, you are required to be attending school at least halftime for the deferral of payments and interest. When you do graduate, the loans can usually be deferred for six months until you finds employment, and then you will generally have a variety of repayment options available so that you can tailor your payments to your income. Don't let the high cost of a college education deter you. There are options available even for those who do not meet low income standards required by federal programs. Take time to do some research and you will soon be on your way. How Not to Pay Back Your Student Loan Is there ever a chance you will not have to pay back your student loans? The answer is: YES! Depending on the type of student loan you have and when you obtained it, you may be able to cancel all or a portion of your loan under one of the following circumstances: * The former student for whom the loan was taken has died. * You become totally and permanently disabled. * Your school closed before you could complete your program of study. * Your school falsely certified that you were eligible for a student loan. * You left school and were entitled to a refund but never received the money. * You teach in a Department of Education-approved school serving low-income students or in designated teacher shortage areas (other types of teacher cancellations are available for Perkins loans). * You serve in the U.S. military (partial cancellation for Perkins loans only). * You're a full-time employee of a public or nonprofit agency providing services to low-income, high-risk children and their families (Perkins loans only). * You're a full-time nurse or medical technician (Perkins loans only). * You're a full-time law enforcement or corrections officer (Perkins loans only). * You're a full-time staff member in a Head Start program (Perkins loans only). * You are a Peace Corps or VISTA volunteer (Perkins loans only). These circumstances apply mainly to federally funded student loans. Other lenders, however, may extend the same courtesy to you if you discuss it with them. They are not required to do so, but asking does not hurt. Keep in mind that should the circumstances above change, you will most likely be asked to repay your loan. Find out beforehand what the exact conditions of the loan forgiveness entails. Doing so will help lessen any surptises in the future. No Credit, Bad Credit, No Problem Even if you have little credit or no credit rating at all, you can still get a student loan. Student loans are a good way to build credit as well, so once you obtain one, be sure to repay it. Wonderful student loans for those with little or no credit are government-backed loans or loans offered through your university. One such option is the Stafford loan. When the student borrows these loans, most lenders do not look at the student's credit history. You can apply for a Perkins loan as well, which also does not look at your credit history. The government supplies the money for this type of loan, but it is reserved those who are most in need, so this option is not available for everyone. Because Perkins and Stafford student loans are often limited to a particular amount each year and in total, there are also government-backed student loans for parents of students, called PLUS loans. Because these are government-backed loans, lenders -- whether a financial institution or the government itself -- do not look at anyone's credit score. These lenders do, however, take a look at your credit history to decide if you are late on any payments or in default. If so, you will not be able to receive a loan. One thing to remember with government-backed loans is that, though you can defer payments and you may have very low interest rates, you must re-pay your loans. The government cannot only hire a bill collector, but they can confiscate your federal tax refunds or even deduct the payments from your wages. Also, if you declare bankruptcy, more often than not, your student loans will not be forgiven. If you have bad credit or no credit, student loans can be a good option for you. Federal Student Loans Vs. Parent Loans Federal student loans have the lowest interest rates and the best repayment options. If you need to apply for a loan and you can qualify for federal loans then make this the top choice. As a way of limiting your loan responsibilities, only get the funds that you will need and refuse any other offers to raise it. Parents can opt to help their children pay off the loans after graduation. Federal parent loans or PLUS loans (Parent Loan for Undergraduate Students) can be considered as another option in getting a loan that offers lower interest rates. Parents that have dependent children who are going to start their university education and have a good credit history can apply for the PLUS loan. PLUS loans are not needs based so you can draw up a loan up to the total cost of your undergraduate education expenses with the other financial aids that you have received deducted from the actual total. One peculiar characteristic of a PLUS loan though is that the first payment for the loan starts about 60 days after the loan is granted. This is different from a student loan where the first loan payment is deferred until after graduation. PLUS loans also require an application fee. The big decision to be made is to determine which kind of loan will be the best option for the individual. When deciding on which loan to get you should first determine the amount of debt that your child will need in order to graduate from his studies. You should also ask yourself the level of responsibility you want your child to assume in paying off the loan. Finally you should sit down with your child and try to work out a repayment plan in paying for the loan. Why Consolidate Your Student Loans? Once you have graduated from a college or university, you need to start thinking about the loans you needed to get through these years. They must be paid back in a timely manner in order to keep a good credit rating for such times when you may need another loan to purchase a home or car. For some students who have a few student loans to repay concurrently, it can be a financial drain on their family finances. That is where student loan consolidation comes in. Student loan consolidation basically consolidates all your student loans into one loan so that it is easier to manage and make payments. When you are getting a student loan consolidation whether from the government or the private market, your existing student loans are paid for and erased by the student loan consolidation lender. The balances are transferred to the new student loan consolidation. Thus you start a new loan and only needs to make a single payment each month. There are many advantages to using student loan consolidation. The interest rates will be lower since it takes the average interest rates of your previous student loans. Thus due to government legislation, the maximum interest rate cannot be higher than 8.25 percent. It becomes a lot easier to manage a single student loan and payment is easier. The repayment options are quite flexible. For federal student loan consolidation, you can opt to start repaying after you have graduated from school. There are also several other options. Another beneficial side effect of student loan consolidation is that it can also improve your credit score. Since you are effectively clearing all your old student loans and taking a new one, your credit score will increase and this is important if plan to take other types of loans in the future. The Four Federal Student Loan Consolidation Plans Anybody studying in the United States and owing a student loan is eligible for federal student loan consolidation plans. Federal student loan consolidation plans are applicable for all students whether you are still in school or a recent graduate or already into your new career. If you currently have several student loans, it is easier if you use federal student loan consolidation to consolidate them into one loan payment thus making it easier to manage. There are four kinds of federal student loan consolidation to choose from: * Standard Student Loan Consolidation The maximum student loan period is 10 years and the payment amount per month is fixed. This type of plan is suitable for students who can afford to pay a fixed amount per month. The interest rate would not be a big factor in huge student consolidation loans. This is easiest for those on a budget. * Extended Payment Plan This type of plan is similar to standard student loan consolidation except it has a longer repayment period of between 15 to 30 years. The repayment period is dependent on the student loan amount. * Graduated Payment Plan This type of plan is suitable 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 per month starts low and increases steadily every two years. * Income Contingent Payment Plan This type of plan is complicated and is based on the student's income level over a period of years. It is also based 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 Options for Paying Your Student Loan There are mainly four options for paying back your student loan. If you land up with a good job once out of college, and can afford to make steep monthly payments, go with the standard payment schedule. Under this option, you can pay off your debt within 10 years with the best interest rate. It's the quickest way to pay off your loans. However, it requires high monthly payments. Graduated payment is an option if you expect to make a modest but steadily increasing wage. The payment requirements will start off gentle, and will gradually increase every couple of years for the next 10 to 30 years. If you're in a commission-based or seasonal business, your income will vary accordingly. In this case, your monthly payment bill will be proportional to the amount you are currently making. You get a levy of get up to 15 years to pay it all off your student loan. With a long-term payment option you'll be allowed to pay the least possible amount per month for 10 to 30 years. That however means that in 30 years you may have paid double the original amount of your loan. You have the flexibility of choosing to switch from one payment option to another, depending on your financial status.. Student loan consolidation is another well-trodden path chosen by graduates each year. It allows you to put together your separate student loans into one big loan. Debt consolidation will bundle your student loans into one, with a single loan amount which will be much lesser than paying multiple loans. Some also choose consolidation because it's easier to keep track of the bill. Banks want their money and will often work with you to find the payment method that is easiest for you to keep paying. The bank gets their money and you can live within your budget. Consolidating Your Student Loans Student loans are just as burdensome as any other loan and in some cases students have several loans taken out in order to pay for college. This is where student loan debt consolidation comes in with a plan of consolidating all of an individual's student loans into one manageable loan. You need to get your facts by researching various places before you apply for one of these consolidation loans. Only certain types of loans can be consolidated under this type of loan and you will need to check. You cannot include loans such as credit cards, loans from family members, or automobile loans in the student loan consolidation. The obvious benefits to consolidating a student loan are that there will be a single payment, probably a lower payment, and one fixed interest rate. The fixed interest rate is especially attractive because this helps a person set up a budget easier. Of course the drawback to a fixed interest rate in this type of loan is that you may not be able to take advantage of future drops in interest rates if they occur. Another drawback to student loan debt consolidation is the length of the term. It could be that you end up paying this loan longer than you would have otherwise and in the end pay more total interest. So be careful to get all of the data about your student loan debt consolidation loan before you sign the agreement.. Finally, you need to determine if consolidation is really for you before doing it. It may be that you want to pay off the loan faster as student debt consolidation loans tend to stretch out longer. But for most it is an attractive way to get your payments down and manage your student loan debt Help, I Can't Pay Back My Student Loan! What happens if you find yourself unable to pay back your student loan? Rather than ignore the payments, try contacting the student loan officer at your bank and ask about a deferment. A deferment will allow you to put off paying in any of the following circumstances: 1. Pregnant or Caring For a Newborn -- If you are not working, no longer in school, and have attended school within the last 6 months for at least halt-time, you may qualify for the parental leave student loan deferment. You will be asked to provide proof in the form of documentation regarding your current situation. If you are caring for an adoptive child, you'll need to get a statement from the adoption agency referencing the adopted child's placement. Certification from your school concerning your enrollment status over the previous 6 months may also be required 2. Economic Hardship -- The way this works is in you need to have income below the low standard of living as determined by the U.S. Bureau of Statistics. Keep in mind you may need to provide proof in this situation, similar to the parental loan deferment. 3. In-school Deferment -- As long as you are enrolled at least half-time no interest accrues and no payments are required until after a six-month grace period after you ceases to be enrolled at least half-time. 4. Disability -- In the unfortunate case that you may become disabled and unable to work for more than 60 days, or you need to care for a disabled spouse or dependent for more than 90 days, then you may be eligible for deferment. 5. Unemployment -- You'll need to be working less than 30 hours per week and you must prove your case in order to qualify for a deferment. Paying Off Defaulted Student Loans If you have not made your federal Stafford, PLUS or Graduate PLUS loan payment in over 270 days, your student loan will be considered in default. What can you do about this to keep your credit from being ruined? Having a defaulted Stafford, PLUS or Graduate PLUS loan on your credit report will cost you dearly in the long run. The bad mark will mean higher interest rates and credit denials until it is cleared, a minimum of 7 years. Even if you pay the loan in full it will still be marked as defaulted. There is only one way out of this predicament - loan rehabilitation. Contact your lender and make arrangements to pay back your student loan and you are on your way to a clean credit report. Your lender wants to get paid, and they know the best way for that to happen is to work with you to come up with a payment you can afford. When you reach a satisfactory repayment agreement with your lender stick to it! After nine full payments on your defaulted Stafford, PLUS or Graduate PLUS loan made within twenty days of their due dates (twelve full payments for Perkins loans) your loan will be taken out of default status and your credit record will be clean. These must be voluntary payments. Garnishment or other forced payments do not count. As soon as your default status is cleared you will be free to consolidate your loans and lower your payments even more. While you may be able to consolidate after three consecutive payments your loan will not be taken out of default status. This will be marked on your credit record as "defaulted, paid in full" and still considered a black mark so loan rehabilitation before consolidation is mandatory for a clean credit history Saving Money on Your Student Loan Anyone that has gone through college knows it cost a lot, which leads to many take out student loans. Just as with any type of loan, it is important that you do your research to find the best student loans for your situation. Different loans will get you different amounts of money with various circumstances behind the loan. However, there are a few things you can do with any student loan to save money. With student loans, the interest rate is adjusted every July 1st making it difficult to know how much you really are going to have to owe when getting out of college. There is, however, a way to lock your interest rates to avoid having them raised after a certain period of time. By consolidating your interest rates you can have them permanently locked for the remainder of your studies. The next thing to look at to help you save money on your student loans is automatic payment. A lot of lenders will offer you incentives and reduced interest rates when you have your student loan payments automatically deducted from your account. The reason being is that you are guaranteeing the lender that you will be paying the loan on time and in full amount by giving them access to your account. This also makes it more convenient for you allowing you to avoid missing a payment. The most obvious way to save money with your loan is to be on time. The minute you are late with your payment the interest rates will go up and your credit will go down. If you do feel the pressure of making the payments on time, make sure to talk to the lender before getting too far behind to see if you can work out an arrangement of some sort.
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