School Loans Loan Educational Blog

Which Loan Discount is for me?

Maximum interest rates for student loans have been capped off by the government since 1965, thanks to the Higher Education Act. This great idea has made it possible for many students to handle taking on high principal loans to pay for college, and not end up in bankruptcy paying them off. What lenders today have embraced, though, is that there is no minimum interest rate that is regulated for student loan borrowers. Nor is there any minimum on fees charged for establishing the loan. So now there are incredible-sounding discount offers aimed at students that are creating a competitive market for borrowers.

So how do you know which repayment incentive is the best for you in particular? Well, that is not an easy question to answer, considering most of the repayment incentives come with strict stipulations to maintaining the benefit.

In general, the best assessment of a discount offered for a student loan is the time period required for the benefit to become valid. Realistically, there are millions of reasons a payment could wind up being late when you are in the real world. Even when you sign up for direct deposit, there is the chance there won’t be enough money in the account for one reason or another. A single late payment usually will disqualify the repayment incentive, and have you repaying any benefit you may have incurred to that date.

With that in mind, consider the “front-end” discounts that are offered with student loans. There cannot be any kind of payout made to you for choosing a particular company, because that would essentially mean the lender was paying you to place the loan with them. However, there are grace periods offered, or even principal balance reductions that are granted immediately. These don’t usually have the “on-time” payment stipulation.

If by chance the company you prefer only offers repayment incentives after a consecutive period of payments made on time, the shorter period of time required is better. Consider the possibility of a future move, or unexpected expenses that could affect your ability to get the payments made on time. The longer you need to maintain the perfect record, the more opportunity there is for other influences to get in the way of your perfect status.

Beware; some lenders will require a “written request” within a set time period before they grant the discount offered on your loan. They will not likely make an extreme effort to make that clear, nor will they be forgiving if you miss it when you read your paperwork. Once you sign, the deal is complete. Any mistakes you make, or fine print you fail to read becomes your problem to deal with. Be sure you understand all the information on your paper work before you sign, and look for the repayment incentive that seems like it will be most beneficial to you as an individual.

Student Loan DISCOUNTS!?!?

Launch yourself into the world of student loans without research, and you might as well throw money in the garbage disposal. Were you aware there are lenders that will offer DISCOUNTS on your loan just to have you as a borrower? It’s nothing like a buy one get one, or “five-finger” discount, but it can be a real financial benefit if you follow the stipulations stated.

Basically, it comes down to the simple rule of competition. Since there is no longer a rule against borrowers consolidating their loans with different lenders than the original, there is a whole new market of clients available. In order to get these new clients, the lending companies had to come up with enticing new benefits. Lucky for you, they mean financial savings.

The usual offerings for discounts will involve reducing the interest rate of the loan. This requires setting up a bank account to make automatic payments each month. They can also offer a discount if you make each monthly payment on time. They could reduce the interest rate as much as 1% if you make 36 months of payments in a row on time. Some Stafford loans will even give a 2% reduction after 48 consecutive monthly payments on time. More recently, there has been a common offer to reduce the overall principal of your loan by a percentage after a specific number of months with regular payments.

Another approach is used as incentive for graduating with your degree – straight out credits of anywhere from $250 to $750 upon graduation, or forgiving the last few payments due on the loan. For many students, this is a great little bonus as they receive their degree. For others, it is a huge benefit as they struggle to pay off the last of their student loans along with the everyday living expenses.

Important to note, though, is the fine print on the loan documents. Usually, if you decide later to consolidate the loan through a different lender, the discount is then added back to the principal balance. You will essentially repay any discount granted if you consolidate your loan to different lending institution. You also may be required to carry a minimum balance on your account in order to qualify for the discount. Obviously, the lenders do not make it a priority to inform you of these caveats. It is up to you to do the reading and understand all the information before you sign.

Keep in mind, these discounts sound fabulous, but more often than not, students will borrow from several different lenders. Then when it comes to consolidation, many of the discounts become null and void as the debt transfers to the new lender. Read the fine print, and try to look for a discount that comes as a relatively short term period, or will be a temporary help to your budget. Read all the information on all the forms, and know what you are agreeing to before you sign the dotted line.

Reducing Student Loans for Veterans

When only about 73% of college tuition is covered by the current G.I bill, the amount of expense left over is often unreachable for our honored Military Veterans. They have served our country, often in lieu of getting their degree right out of high school, and are no longer rewarded to the same degree as the veterans from World War II. The original G.I. Bill was to cover the entire college education, plus a monthly cash benefit for the first year. Now our vets are forced to find other means to meet expenses.

Luckily for some veterans of the Iraq and Afghanistan wars, there are two colleges that will honor their service to a higher degree. Illinois residents who have served in Iraq or Afghanistan are being given access to train for new careers. They will only pay for textbooks and fees. The degree’s they can work towards are an Associate of Arts in Business Administration, or a Bachelor of Arts in Management.

The original program for this school was offered to “First Responders” or those already employed in a police or firefighting position that wanted to further their education. The federal government established this program with a $750,000 grant, and now will expand to include military veterans.

Pace University in New York City is also planning to honor our brave soldiers by awarding a 50% tuition scholarship to veterans from Iraq or Afghanistan. These soldiers must have served in one of the two countries since 2001 to qualify, but they are free to choose almost any degree offered at the school’s two locations. The only limitations are on the law school, the doctoral program, and the Executive MBA programs.

These two programs are taking advantage of a clear market for dedicated and successful students. Armed service veterans are a hot commodity, and the two colleges are recognizing the potential of these unique individuals. Just as a sports team will recruit good players, these schools are trying to attract more students with a desire to succeed that is not easily swayed. With the two schools specifically targeting the most recent wave of veterans, more and more colleges will hopefully get on board as well.

How to increase the chances of getting the school loan
Part 4

Commented versions have laymen’s explanations on the laws so that you might understand them better.

In any case, it is better that you, as the applicant, sticks to the truth and take the risk. You will find the financial support that you are seeking in order to continue your education, but lying or making huge mistakes is not worthwhile and neither is the trouble and worrying that you will cause your parents on such ill-made decisions.

Besides sticking to the truth there are five general points that you can do to increase the chances of getting that school loan that you require so much.

1. Inquire

The process for the school loan has a particular logistic and this can change from school loan company to school loan company, especially if you are seeking to get the school loan funding directly for your chosen school. You need to know what will happen or what to do in several case scenarios such as you dying (sad but it can still happen), or being unable to continue paying the school loan and more.

It does not matter if you do not know or are not sure if you covered all the scenarios in one visit, as many times as you can think of new situations, you need to ask them. This is the point of having a serviceably school loan company.

2. Analyze

When you visit the school loan company or the offices of the school administration personnel you will be handed a list of documents that you need to present and provide in order to channel and process your application.

For example; if you are looking directly to the school you need to analyze the list and see if they need the same documents that school services do, in such a case, ask if you need still to present them or if with just one set suffices.

3. Confirm your references

Make sure everyone is on the same page.

4. Keep copies and everything in a single file

Make sure that you have one single file where you can store and file all the proper and pertinent documentation of the application as well as the process started with the application and finalized with the last payment.

Ask the school loan executive or the school personnel to sign “received” in a copy of each document you presented for the loan and do not forget to file as well every single payment slip of your loan so you can have a track record on how much have you paid; do not rely on the school loan personnel.

How to increase the chances of getting the school loan
Part 3

The process for application for a school loan is basically the same at any student loan company. You will be given a list of documents that you will need to present to the school loan executive or employee that will be handling your case so that he or she might start the process and your application be approved.

Of course, it can also be denied even if you do everything right. Denial and approval of a student loan is based on several considerations and they vary from company to company.

Always remember that the student loan executive is an employee of a company. And as such he or she will not hesitate to deny your application if he or she deems that you are presenting false documentation or that are otherwise lying or altering your documents or statements from your references in order to making “extra sure” that you will get the loan.

So, even if he or she seems nice and treats you in a friendly manner, he or she is just doing his or her job. Do be nice to him or her, be polite and smile, but do not loose track that in the end, he or she will not hesitate. So be truthful.

Making a mistake or neglecting to state something because you truly forgot or because you were thinking on something else are deemed as “errors” and more often than not, dismissed as such with little to no weight on the fact that your school loan might be approved or not.

Yet you need to understand and remember also that every state has a particular and unique legislation to the matter and what might seem like a “error” or “mistake” to the people that know you, might seem like a federal offense to a over-jealous employee who believes that it is his or her duty to keep everything “clean”. Penal and civil prosecution in such matters are subjected entirely to the decision of the ADA, but it can certainly give you a bad mouth taste.

If you are not sure what is the legislation on your state you can approach your congressperson’s office or representative to seek for the legislation. You can also buy the book at any bookstore either new or used and read it through; you will certainly have questions, so buying a commented version is better.

How to increase the chances of getting the school loan
Part 2

Which, in turn means that you will be using second hand books and used lab coats, for instance; and when you determine this amount as accurately as possible and estimated how much more can the school attending cost raise because of inflation or any other causes, then you can start seeking a school loan company.

Of course, you must make sure that the school loan company that you apply for is the best one that suits your needs and preferences as well as the needs and preferences of your family. It should be a school loan company that is able to provide you guidance and orientation, as many times and as frequently as you or your parents require.

It should also provide you with a contingency plan if, for some reason, you have to stop or reduce the amount that you pay back on your school loan as well as offer you an escape hatch if you simply cannot pay anymore, such as a job opportunity or other form of consolidation. You need to verify that the school loan company that you are choosing is actually legal and that the contract that they will provide you is not abusive.

It might seem that it is a lot to learn and to look for, and indeed, in some cases it might be. But consider this, if you do not pay enough attention, then you will not have enough money to go to school and your family can even be left with less money to cover the expenses at home. So you see, if indeed it is complicated and heavy it is worthwhile the effort.

Of course, there are several types of loan companies that provide service to students, you can approach an alternative, federal, private or public loan company, yet you probably do not know that you can even turn to your chosen school to ask for a student loan.

It may be that turning to the school administration seeking a student school loan might not the right choice or at least not the choice that you would prefer; but here is not the point or place to consider the social position that you will have. It is the time to consider the lowest interest rate and the highest advantages possible to your benefit.

Therefore, ego and pride aside, it might be a good idea to consider a school loan that comes directly from the school that you intend to attend.

How to increase the chances of getting the school loan
Part 1

If you are already determined to going to a specific school, then you have made the first step into adulthood, where there is an increased number of responsibilities, freedoms and, of course, tough choices. One of these tough choices is to be sufficiently honest with yourself and your family to state whether or not you need to apply for a school loan.

Telling and confronting your family that you need a school loan is not an easy task, especially if your family believes that you are contempt or sufficiently prepared by going to community college or public university, while you believe otherwise.

This might be the first of a series of hard and tough discussions you might need to have with your family –including siblings- because it is a tough decision and a hard debt to get into, but becoming the responsible adult that you are. You will be able to guide them through it with little to no harm to the rest of your family.

Yet, naturally, you need to determine what it is that you are planning on studying and where are you planning to do this. It is better that you have at least three choices, all in a ranking position (which one is your top choice and so on) just in case that even the school loan company tells you that they will help you only on “X” specifically.

The point is to get the education that you want; once you are finished and you have your degree you can switch and do a master at your first choice. Once your family (and you) have come to terms to the fact that you do not have either the sufficient means or means at all to provide you with the school related expenses that you will be requiring, mostly truth in the case of expensive professions such as medicine, you can start inquiring as to which school loan company.

You need to make an estimate on how much money will you be needing through the entire process of time and education, a common mistake is that people often forget to count such minuscule problems such as school trips and practices, these cost too. If you do not count them when you do your estimate cost, you will be forced to either take on a second school loan or to skim as much as possible from the original loan.

Seniors Beware – Exit Interviews are LOOMING!

College seniors are about to be sent off into the big, bad world. But not before the ever-exciting Exit Interview for all those great Federal loans they secured throughout their days on campus. Everyone who borrows money that is in the form of a loan backed by the federal government is required to do one, and it is advisable to pay close attention. These interviews are actually where you will learn about the repayment terms that you have the right to demand, and the responsibility for getting these terms that falls on the borrower.

We just finished the month of April, which was the National Financial Literacy Month. It is a great signal to get college seniors thinking about the future of their finances, and how they will start paying back all the money they borrowed to get that all important degree. Despite the much more appealing options to gain your attention, pay close attention to the information in the exit interview.

In particular, be sure to note the total balance on the outstanding loans, as well as the expected monthly payments. This will enable you to budget your income accordingly, and make short term as well as long term goals for pay-off dates.

Then be aware of when your particular grace period ends. You usually will have six months from graduation to make the first payment, but that may be a different specific date depending on your school’s particular ending date. Start planning now for those payments so you aren’t left struggling in six months.

Find out what options you have for repayment as well. Be prepared for unexpected events to occur in the next six months that may affect your ability to pay. There are specific reasons that the lender will understand, and be able to forgive or work around. For example, if you had a medical emergency and incurred hospital expenses that would take up a portion of your income, the loan company may be able to grant a temporary reprieve from payments. They may even be able to recalculate your monthly payment amounts in accordance with an unexpectedly lower income than originally projected.

Finally, be sure you know who will be expecting your payments. Usually college students will end up with several different creditors during the course of the education, and that will make several loan companies that will be expecting payments. Not all companies will send payment booklets to borrowers, and it is still up to you to get the payment in on time.

Late or missing loan payments can have an extreme affect on your credit score. The important thing to remember with federally backed loans is that the lenders are focused on the needs of the borrower just as much as they are on getting their money back. Keep all contact information accessible in case anything should arise that you have questions about. This will provide both you and the lender with a positive business relationship, and will likely allow you to maintain excellent credit status with the lender.

Multiple Pluses for Multiple PLUS Loans

One of the best options available for a parent to help their college students pay for the ever-increasing tuition costs these days is to apply for a Federally funded Parent Loan for Undergraduate Students, or PLUS loan. The low interest rate (capped by the government and currently just 8.5%) allow families to pay for the college student’s expenses without draining their income.

Sometimes, though, parents end up securing multiple loans for each child and multiple loans for multiple children. These expenses will continue to add up, and many parents will be left paying of several loans and wondering how they will ever get all the loans completely paid off.

Now there are options available to parents with multiple PLUS loans. Keep in mind that loans are secured with a social security number to delineate the responsible party. The personal identifier will be on each and every loan secured. These loans are therefore eligible to be combined and consolidated to a single loan company, making payments easily managed.

Getting the best consolidation loan available will take some research, but an abundance of benefits will be associated that are unique to the entity offering them. Generally they will be based on rewarding borrowers for steady repayment, or for using an electronically debited account to make payments. The interest rate could be reduced, there can be cash rebates, and the repayment period could even be deferred while the student is still in school. Most will not charge penalty for early pay-offs either.

Take the time to look into all offers found to consolidate PLUS loans, and be sure the particular lending institution does not limit their consolidation loans to the ones secured for a single student. PLUS loans are not limited to the balance between the cost of attendance and the expected family contribution. This means that the loan can be as much as the entire cost of attendance for the year, allowing the funding to be used for supplies, living expenses and even computers.

Applying is as easy with the online forms, and the many companies that offer these multiple loan consolidations will give responses within minutes. If your application is rejected, do not give up. Look for other companies that have special “adverse credit” type programs. They specialize in financing families with less than perfect credit, and can find ways to help you. They can even help you rebuild your credit while they do it!

Get Loans, or Get a Job?

The summer is quickly approaching, and many high school seniors are facing the rising tuition rates at their chosen college. The question for many families is how they are going to meet those tuition fees, and still have enough money to support the rest of the family members. While some expenses can be covered by federal loans and grants, not every student will secure complete funding in this manner. Many will need to work their way through college, so the best answer may just be the Federal Work-Study program,

The positions available through the program are sometimes offered as early as the summer semester, so students who are interested may want to consider applying soon. That will give them the best opportunities on campus, and peace of mind while finishing out the other preparations for school. They also provide a unique opportunity to gain on the job experience in the student’s particular field of study.

Work-study jobs can be located on or off campus, and they allow students to earn a paycheck as well as meet college expenses. These positions in particular are sensitive to class schedules, and the hours worked per week can be capped by the university to prevent overworking the student and thus counteracting the benefit of an education. Generally, part-time work schedules consisting of 20 hours or less per week tend to allow the student adequate time to earn money, as well as attend classes and study.

Finding a work-study job begins with the completion of the Free Application for Federal Student Aid, and requesting information about student employment. Then if the student qualifies (based on financial need, predominantly), they will be offered choices too follow up on with the school. Waiting to file may exclude some students from participating, because there are a limited number of placements available at any one campus.

If you have filed your paperwork with FAFSA, and have not been offered a work-study placement, schedule an appointment with the financial aid officer at the college. It is possible to be placed on a waiting list in case a position becomes available.

Whatever a family has planned to meet the costs of higher education, more information will always be beneficial to make important choices like where to find a part-time job. File the FAFSA as close to January 1 every year so that the most options remain easily available. The time to find a great work-study position is beginning right now, so get those resumes printed and the interview skills polished.