Student Loan - Student Loan Consolidation Programs
Student loan are loan offered to students to assist in payment of the costs of professional education. These loan usually carry lower interests than other loan, and are usually issued by the government. There are a number of different types of college student loan available.
College student loan has to be paid back to the lender and the amount is usually increased with interest added over the term of the loan.
Student loans can be subsidised or unsubsidised.
A subsidised college student loan is one where the interest is paid whilst the student is attending college. To obtain a subsidised college student loan it is necessary for the student to be assessed to decide whether they will have to pay the interest accrued throughout the duration of their college course.
An unsubsidised college student loan has no interest-free period for the student and the interest is added from the time that the loan is paid out until it is repaid. Of course, not every student qualifies for a federal college student loan or they may find that they still require further funding. Either way, there are a number of alternative sources of student loans available. These types of loan are offered by private lenders and the interest rates can vary greatly. It is important to compare the available private loans to ensure that you get the best college student loan possible. This means investigating other types of loan that you may be able to apply for, not just a specialised college student loan. The private lenders will perform a credit check on the student and any co-signer before considering offering a college student loan. Beware of low introductory interest rates that may seem attractive with a student loan but that increases over time. Some of the private college student loan companies also charge a processing fee that significantly reduces the amount of money that the student actually receives.
There are several types of loans available to students. The simplest categorization is into federal student loans and private loans. Federally funded loans are administered initially through the US Department of Education's Federal Student Aid programs, and are usually the easiest to get student loan consolidation services for. These federal programs disburse about $60 billion a year in loans, work-study support and grants. Stafford loans are the most common form of federal loans for students, but there are a variety of other federal payment plans - among them military / ROTC plans to pay for college.
Private student loans are administered by standard lending institutions. Among the most common are Citibank student loans and the Sallie Mae Signature student loans. These lenders are basically providing unsecured (or in some cases secured) loans to you as a student, and will most often charge higher interest rates than their federal counterparts.
Private and federal loans, along with scholarships, can be combined to fund your education. However, it's important that when it comes time to consolidate student loans, you do not mix the two types together. You should always consolidate your federal loans first, then separately consolidate private student loan debtt. The benefits of consolidating your federal loans include: a lower interest rate (usually, but keep in mind that interest rates change every July 1), increasing the time for loan repayment to 30 years which reduces your monthly costs, and reducing the number of lending institutions you send checks to every month. For a more complete discussion of this topic and consolidation eligibility criteria, you may search for how to consolidate student loans. Medical student loans fall into a special class, and are discussed on medical school loans.
Trends for student loans Nearly 50% of recent college graduates took out student loans, with an average borrowed around $10,000. Until recently, student loan interest rates ran between 6-8%. Recently, though, rates have fallen very low. As of fall 2003, Stafford loan interest rates were in 3-4% range .
Students who currently have loans, either a single loan or multiple loans, have a variety of options for reducing their payments and indebtedness. Because interest rates have fallen, loans can be consolidated or in some cases refinanced. When you're considering refinancing student loans or student loan consolidation, you need to compare interest rates before you consolidate federal student loans.
Effects of student debt
Like any debt, student loans can influence your credit and your future decisions. Students who borrowed a substantial amount for college (more than $5000) are less likely to pursue higher education. In addition, student loan debt that exceed 8% of your income can be seen negatively when your credit gets assessed for future loans (this is especially true if you have one or more defaulted student loans).
Two ways to reduce the debt burden are: 1) reduce or eliminate the principal balance. Specific types of loans can sometimes be forgiven by service or other higher education - look into the specific student loan program you have. 2) Reduce your monthly payment. Since debt burden is measured by comparing your loan payment to your income, reducing your payment helps your credit evaluation.
