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Aug
20

7 FAQs you should know before going for Private Student Loan

Author: Sally Croft

We know that applying for private student loans for college is not on your list of fun things to do. However, Federal student loans may not cover all college expenses, so what do you do? Private student loan may just be the answer. This article will give you answers to the most commonly asked private student loan questions and help you to feel at ease as you apply for your private student loan.

1. What is the difference between a Private Student Loan and a Federal Student Loan?

Private Student Loan are designed to supplement federal loans when federal loans and other aid have been exhausted or just are not enough to cover the entire cost of your education. It is best to get private student loans as a last resort and only when you have used up all other federal student aid available to you.

Federal Student Loans usually come with lower interest rates than private student loans. Federal loans have standard rates and fees which may vary by lender. Federal student loans have fixed interest rates, while private loans typically have variable interest rates.

2. When should I apply for a Private Student Loan?

You should apply for a private student loan as soon as you have received your acceptance letter from the school you plan to attend. However, there is no time restriction so you can apply for private student loans at any time during your college education.

3. Do I need a co-signer if I don’t have good credit or have not established credit?

You should still try on your own first, keeping a co-signer as a back-up plan. However, if you do need a co-signer you will need someone who is an eligible U.S. cosigner to qualify.

4. Can I use a private student loan for other than tuition?

Yes. The student loan you acquire can be used for any education-related expenses, such as fees, books, a computer, school supplies, room and board, and transportation among others.

5. Are loan payments required while I’m still in school?

No. While you are enrolled in at least half-time, you can choose to defer all payments until completion.

6. What are my options if I cannot make my minimum monthly payment?

During the student loan repayment period, you may request forbearance. Forbearance is based on financial hardship and is a temporary postponement or reduction of loan payments, for a maximum of six months. Forbearance is granted at the lender’s discretion.

7. What happens if I don’t repay my Private Student Loan?

If you do not repay your private student loan according to the terms disclosed on your promissory note, you may eventually be in default on the loan which can damage your credit worthiness. Negative consequences may include:

  • A negative effect on your credit rating that may limit your ability to obtain future credit.
  • A requirement to immediately repay the entire amount of the loan with interest.
  • Withholding of your wages.
  • If there is a co-signer, they too will suffer the same negative consequences.

Knowing about private student loans make a difference between getting the money you need for school or sitting the semester out.

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Posted in Private Student Loan, Student Loan | No Comments »

Jun
15

Best and worst of taking Student Loan Debt

Author: Sally Croft

The majority of college students graduate with a huge amount of debt. Most students have to taken out student loans to help with the rising cost of college tuition and other fees. But are all student loans built alike? Taking out loans is normal and a good investment in you and your future, but not all student loans are built alike. There are some good and bad of taking out student loans – let’s take a look at a few.

Public, Federal Student Loans and Private Student Loans

Public, Federal Student Loans for the most part are good debt. These loans have lower fixed interest rates and flexibility when it comes to repayment. Federal loans do not have to be paid back until four to six months after graduation. This six months gap can give you time to land some income so that you can start paying back on your loan.

Private Student Loans are like credit cards debt. Private student loans give you no say in terms and agreement, the monthly payments are due no matter what your financial situation and interest rates are much higher than federal loans.

What if I cannot pay back my student loan after six months?

If you have not find a job or do not make enough money to afford the minimum monthly payments on your student loan; you can repay your loan by selecting one of the following options: extended repayment, graduated repayment, deferment, forbearance and income-based plans. Talk to your lender to see which option is best for your unique situation. But not making payments on your student loan will not make it disappear; actually the situation will only get worse.

Can I have my Student Loan Debt discharged?

Absolutely not! Student loan debt is never dischargeable, even if you filed for bankruptcy. There is just no way to avoid paying back your student loan, so the best thing to do is to devise a plan and just pay it back.

Are all Student Loans bad?

Most student loans get a bad rap, but all student loan debt is not bad. In most cases it is the borrower of these student loans who are making a good situation bad, when it takes is communication. Simply talk to your lender and make special arrangements for repayment.

There is good and bad, but to make student loan debt the good debt that it can be, make sure you do your research, borrow smart and have a plan to own up to your responsibilities and pay it back.

What’s your opinion?

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Posted in Federal School Loan, Private Student Loan, Student Loan | 2 Comments »

Jan
11

Applying For Student Loan In 2010 – What You Should Remember?

Author: Sally Croft

A student or education loan is a form of financial aid that must be repaid with interest as opposed to scholarships which do not need to be repaid. If you are unable to get a financial aid, scholarship or money from family members, the next resort is applying for a student loan. Although student loans can be a reasonable way to finance an education if not carefully planned student loans can be a disaster. Obtaining student loans are sometimes easy however maintaining them are a different story. Below are some of the things you should remember when applying for your 2010 student loan.

Plan Ahead:

Planning is the key to not being overburdened by student loans. By researching for the best interest rates, maximizing your Perkins loan availability and cutting expenses you should be able to manage the major expense of student loans.

Research:

Never apply for any loan without proper research. When you’re trying to figure out which student loan are right for you, there’s a lot of information to digest. Understanding the details may help you make an informed financial decision.

Shop Around:

Simply because the college or university gives you the loan application does not mean that the loan is the best deal in town. Make sure you have fully examine other options for aid. The school may give you an application for loans with interest rates between 8 and 10 percent. However, if you research lenders you may find loans that have interest rates as low as 6 percent.

Timely Submission:

Provide all requested documentation in a timely manner. Fill in all applicable areas of the application and sign and date where indicated. Missing information and or signatures can delay processing of your loan.

Keep All Open Credit Current:

Pay all current credit cards on time during your application process. This includes any mortgage, rent, car payments, student credit cards and utilities. Do not miss a payment of send in your payment pass the due date. This is critical to a successful closing of your student loan.

Do Not Make Any Major Credit Purchases:

Do not make any major purchases during the loan process. Increasing your debt can change your credit score and possible cancel, suspend or change your loan of terms among others.

Limit Credit Inquiries:

Do not incur any non-essential inquires to your credit report until after the loan process has completed.

Accrue Interest Loans:

Never take our private loans or cash advances from credit cards, lines of credit, or equity loans to pay for tuition. Private loans, such as personal loans, begin to accrue interest the moment you or your school cashes the check, whereas subsidized Stafford loans do not accrue interest until 6 months after you graduate.

Collateral Student Loans:

Many people take out equity loans on their homes, cars and other property to finance their education. However, equity loan is a secured loan and if for any reason you cannot meet the payments you risk losing your home or the property that you used as collateral to receive the loan.

Only Borrow What You Need:

Many people make the mistake of borrowing more than they need. But keep in mind that you will have to pay this money back and the more you borrow the more interest you will have to pay back, so only borrow what you need.

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Posted in Private Student Loan, Scholarship, Student Loan | 4 Comments »

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