About half of all students nationwide will take out a student loan during their college years. That leaves a lot of debt floating around out there, but it's for a good cause. Student loans have become a fact of life for many of us, especially since education is getting harder to afford. So, if you decide that a student loan is what you need to get through school, take a moment to consider what you want in a lender.
The right lender can make your loan repayment a fairly painless process. A bad one can mean one big financial headache. All federal student loans must offer the same interest rates and fees. Some lenders offer extra incentives to repay your loans in a timely manner, such as prompt payment discounts. These can be earned by setting up automatic monthly payments through your bank account, or by making your successive monthly payments on time ? typically for 12 to 48 months. Students who go the auto-debit route have a higher repayment success rate, but should always make sure they have enough money in their account to cover the bank draft. One missed or late payment is enough to disqualify students from these discounts.
All student loans are not created equal. Federal Stafford loans are some of the cheapest you can find, and the repayment terms are flexible as well. There are limits to how much you can borrow, though. If you need more money, you can ask your family to consider a PLUS loan. They, too, are relatively inexpensive, but parents are held responsible for repayment if the student defaults, just as they would be if they co-signed for a private education loan. Private loans are among the most expensive student loans available. They tend to have higher interest rates, but students can borrow more money with them. (That's not always a good thing!) Finally, credit card debt should be an option of last resort. It's expensive, especially if you carry a monthly balance, and it can haunt your credit report for a long time. Go for a Stafford loan first. If you truly need to more, then carefully check out the other options before committing yourself.
Customer service is another area where some lenders clearly excel over others. The federal government can make lenders adhere to interest rate guidelines, but it can't make them pleasant to deal with. To make sure you choose a good one, pay a visit to your school's financial aid office. They usually have the scoop on problem lenders. While you're there, ask them if they have a preferred lender list. This can help narrow down your choices. Ask questions. Does the lender have online repayment options? Do they combine payments of Federal and private loans? Is their customer service available by phone, toll-free and 24 hours? These are things to consider before selecting a lender.
Also, be aware that lenders can sell your loan to third parties once the loan hits repayment status. These third parties will then service your loan, which means you won't be dealing with the bank or group that issued the loan. This can be good or bad. If you'd rather deal with the same group throughout your repayment process, look around for lenders that offer life-of-the-loan servicing.
Shopping around for a student loan is a lot like shopping for a car or a credit card. The terms and the service make all the difference. You don't want to end up owing much more than you thought you would, or having to deal with discourteous loan servicers. Look for lenders who have a good reputation for communicating well, taking care of their borrowers, and making the repayment process as convenient as possible.
It is well worth setting up a consolidation account today. Any federal student loans that you have out can be incorporated into the program and they will allow you to have a fixed interest rate, based on the average of all the interest rates. College loan consolidation will allow you to take out a single large loan with which you can pay off all your student loans, so that instead of having to make several payments each month, you only need to make one. Its become difficult for the average student to be both a full time student and an undergraduate. The rates are very low and repayment period is extend to give you a breathing space, and monthly payments can go down to more than half. In order to qualify for most of these lowest interest bearing federal loans, the student has to show a need for the financial aid but are not required to submit to a credit check except in the case of PLUS Loans which are actually issued to parents of dependent undergraduate children and carry a little higher rate of interest than in the case of Stafford and Perkins loans. To take or not to take a student loan should depend on your ability to pay back without tears. Some banks even offer special deals for student loan consolidation accounts, where the interest rate may be as low as 3-4%. After interest is added you could be paying a total of almost $40,000.00, so it is extremely important to make sure you are getting the best deal possible with your loan consolidation. Consolidation will not affect the right to forgiveness for Stafford loans. A student loan is beneficial to both the student and the parent because it helps the student be guided financially and it takes the burden off parents of having to pay such high costs for their childrens educational careers. Having researched and minimized your final selection to a handful of potential private lenders, you will do well to then go to each lender and negotiate to obtain the best terms possible either on your own credit standing or with the support of a cosigner. A federal student loan consolidation can help you do that more affordably by extending your repayment term and lowering your payment and interest rate. Do not think about whether to consolidate your college loans or not, just do it. With a subsidized Stafford loan, which is granted upon financial need, interest on the loan is not required to be paid while you are still a full time student. However, it is a great idea to shop around for your options before you have to make those first payments after graduation! This helps ensure that you have everything organized before it has a chance to get out of control. The way educational costs are soaring day after day, parents have a big fight on their hands to give a decent college education to even one of their children as it would mean a big slice off the take home pay of an average parent. Or Student Loans Consolidations Success for free information for your informed choices. It is possible that interest rates will drop lower than the current rate in the future. After interest is added you could be paying a total of almost $40,000.00, so it is extremely important to make sure you are getting the best deal possible with your loan consolidation. You can also consolidate if you have more than one loan and you have not yet unified your loans. Put all your eggs in one good basket for lower rates and lower monthly repayments. This procedure should better be adopted at the point of taking every new loan. The Perkins forgiveness program will forgive up to 100% of your loan if you are: a full-time teacher employed in public or nonprofit elementary or secondary schools in districts eligible for ESEA Title I-A funding, where the percentage of children from low-income families enrolled in the school exceeds 30% of total enrollment, or a full-time special education teacher in public or nonprofit elementary or secondary schools (including teachers of infants and toddlers) or qualifies professional providers of early intervention services under the Individuals with Disabilities Education Act (IDEA), or a full-time teacher of math, science, foreign languages, bilingual education, or other fields determined to have a shortage by the state educational agency. If you consolidate, you are locked in at the current rate for the lifetime of the loan. You can acquire information about consolidating at any bank or directly with the U.S. You will be better off to consolidate now so as to forestall a higher debt load. A college loan consolidation may also benefit you in the form of lower interest payments, so that you pay down the principal more quickly than you would have if you continued paying off your student loans individually. While borrowing money is never the ideal way to pay for anything, there are hundreds of thousands of people for whom a college education would have remained out of reach were it not for student loans. However, to consolidate a college loan while in school does not mean that you must begin repayment immediately.
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