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.