Indian Islamic Students Welfare Trust Offers Educational Loans for Islamic Students.Only for Students under Govt Recognized Seats in Islamic colleges. Engineering and Professional Courses (Engg, MBA, MCA).
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Wednesday, August 26, 2009
Sunday, August 16, 2009
Student Loan Forgiveness
Under special circumstances a borrower can get a loan discharged or be given loan forgiveness. Volunteer organizations, such as the Peace Corps and AmeriCorps, work with borrowers to get their loans cancelled in part or in total through loan forgiveness. Through volunteer work, military service, as well as teaching or practicing medicine in certain communities, a borrower can essentially work off their loan debt. With a loan discharge the loan is essentially cancelled or could be reduced.
However, there are only a few circumstances when this option is available which include; bankruptcy, death of the student for whom the loan was taken out, if the loan was falsely certified by a school, the student becomes totally and permanently disabled, the college the student was attending closed, and there are also loan discharge options specifically for teachers and military armed forces personnel.
However, there are only a few circumstances when this option is available which include; bankruptcy, death of the student for whom the loan was taken out, if the loan was falsely certified by a school, the student becomes totally and permanently disabled, the college the student was attending closed, and there are also loan discharge options specifically for teachers and military armed forces personnel.
Student Loan Debt Consolidation
If you have more than one loan servicer and a fair amount of debt an option for both federal and private student loans is loan consolidation. Through loan consolidation, a borrower who has been making their payments but finds their debt to be more than they are likely to manage can combine all of their loans into one loan under a single servicer.
This will make it so that all the loans are in one lower payment, but it also means that the loan will be extended out beyond the standard 10 year term. For federal loans there is the Federal Consolidation Loan which extends the loan to 20 years if there’s more than $7,500 and extends it to 30 years if there’s up to $60,000 in debt. Once the loans are consolidated they can’t be consolidated again unless another loan is taken out or one that wasn’t eligible before becomes eligible.
If your one of your current lenders isn’t willing to consolidate then the borrower can seek the assistance elsewhere as the loan consolidation will require a new promissory note and agreement on a new interest rate and repayment terms.
This will make it so that all the loans are in one lower payment, but it also means that the loan will be extended out beyond the standard 10 year term. For federal loans there is the Federal Consolidation Loan which extends the loan to 20 years if there’s more than $7,500 and extends it to 30 years if there’s up to $60,000 in debt. Once the loans are consolidated they can’t be consolidated again unless another loan is taken out or one that wasn’t eligible before becomes eligible.
If your one of your current lenders isn’t willing to consolidate then the borrower can seek the assistance elsewhere as the loan consolidation will require a new promissory note and agreement on a new interest rate and repayment terms.
Consider the Student Loan Payment Options
thing to consider is what repayment options are available on the loan. This can make all the difference in the world on if you can afford a loan or not. Here again federal loans tend to have a leg up on private loans as they have more flexible repayment options and better forgiveness policies.
Most all federal loans will offer:
Whether or not a private loan will have these options is a toss up dependent on the lending facility and the credit situation of the borrower. These options have a great impact on how much your monthly payments will be and how much you can manipulate it to meet your needs.
Other benefits of federal loans that might not be available with private loans include having no prepayment penalty, the ability to defer payments, being able to switch your method of repayment, and having a 6-9 month grace period after graduation where repayment doesn’t have to be made.
Most all federal loans will offer:
- Standard monthly repayment plans
- Income contingent repayment plans
- Extended repayment plans
- Graduated repayment plans
Whether or not a private loan will have these options is a toss up dependent on the lending facility and the credit situation of the borrower. These options have a great impact on how much your monthly payments will be and how much you can manipulate it to meet your needs.
Other benefits of federal loans that might not be available with private loans include having no prepayment penalty, the ability to defer payments, being able to switch your method of repayment, and having a 6-9 month grace period after graduation where repayment doesn’t have to be made.
Student Loan Interest Rates
A loan’s interest rate is always going to take top priority when looking at the terms. This is where the federal student loans have an advantage over the private student loans. The qualification for federal student loans is based on financial need, which has made it possible for the government to cap the interest rates and keep costs lower.
The current Direct Loan rates are fixed at:
This isn’t the case with private loans whose interest rate is connected to the fluctuating LIBOR and PRIME index rate and the borrower’s credit. This translates into typically higher interest rates and overall higher expense for the loan.
Interest rates for private loans also vary depending on whether the money is being school-channeled, or sent directly to the school. If a loan isn’t school-channeled they almost always have a higher interest rate because of the added risk of not having a school involved.
The interest rate is expressed in true form as the Annual Percentage Rate, or APR, which includes all fees associated with the interest. This is the number to use when comparing lenders as this is the true reflection of the total cost of the loan.
The current Direct Loan rates are fixed at:
- 5.6% of undergraduate loans
- 6.8% for graduate and unsubsidized loans
- 7.9% for PLUS Loans
This isn’t the case with private loans whose interest rate is connected to the fluctuating LIBOR and PRIME index rate and the borrower’s credit. This translates into typically higher interest rates and overall higher expense for the loan.
Interest rates for private loans also vary depending on whether the money is being school-channeled, or sent directly to the school. If a loan isn’t school-channeled they almost always have a higher interest rate because of the added risk of not having a school involved.
The interest rate is expressed in true form as the Annual Percentage Rate, or APR, which includes all fees associated with the interest. This is the number to use when comparing lenders as this is the true reflection of the total cost of the loan.
Student Loan Lenders
Direct-to-consumer federal student loans are offered by the government through the Department of Education which serves as the lender. Though Federal Family Education Loans for parents of students are also offered through the federal government, they are actually handled by government approved lending facilities.
Lenders for private student loans can be banks, credit unions, higher education institutions, or specialized lenders. Most of these institutions offer programs similar to federal student loans, however the terms often differ significantly.
Lenders for private student loans can be banks, credit unions, higher education institutions, or specialized lenders. Most of these institutions offer programs similar to federal student loans, however the terms often differ significantly.
Saturday, August 15, 2009
Federal Student Loan – The Basics
With college graduates on average earning substantially more over their careers and less likely to experience unemployment, getting a higher education is becoming more and more essential. But as that need has risen so has the cost of higher education.
Of course, while acquiring this education most students haven’t yet begun to work, at least not on a full time basis, which makes the means of paying for the education difficult at times. The government recognized this conundrum of students and so began federal student loan programs for both graduate and undergraduate students.
Of course, while acquiring this education most students haven’t yet begun to work, at least not on a full time basis, which makes the means of paying for the education difficult at times. The government recognized this conundrum of students and so began federal student loan programs for both graduate and undergraduate students.
When You Should Consider Taking Out Private Education Loans?
As the average cost of college balloons to more than $6,000 a year the use of private loans has grown as well. The ease of obtaining a private student loan has helped the private student loan volume increase by approximately 25% a year. However, it is highly suggested that students attempt to first attempt to obtain federal student loans prior to private student loans.
The primary reason for this being that, like scholarships, private student loans reduce the amount of financial need, or need-based aid, required to cover the cost of attendance. This means the borrower is more limited on the amount of federal loan assistance they are eligible for receiving. A direct-to-consumer private loan can bypass this problem as it is not required to inform the school of the loan therefore isn’t factored into federal loan calculations.
However, this could soon be changing as there is legislation currently pending that would require lenders to inform a college about all private student loans.
The primary reason for this being that, like scholarships, private student loans reduce the amount of financial need, or need-based aid, required to cover the cost of attendance. This means the borrower is more limited on the amount of federal loan assistance they are eligible for receiving. A direct-to-consumer private loan can bypass this problem as it is not required to inform the school of the loan therefore isn’t factored into federal loan calculations.
However, this could soon be changing as there is legislation currently pending that would require lenders to inform a college about all private student loans.
Private Student Loan Big Lenders
Private Loans can come from all sorts of sources. But as could be guessed, there are some bigger players in private student loans than others. Sallie Mae, with its Signature Loans, is at the forefront of the private student loan sector. However, large financial institutions are also major sources, such as:
- Wellsfargo
- Wachovia
- Citibank
- Chase
- Sun Trust
- Bank of America
- Discover
Interest Rates of a Private Education Loan
As mentioned earlier private education loans, also referred to as Alternative Education Loans, carry higher interest rates and fees than those of federal loans. Whereas federal student loans are offered at a low fixed interest rate, private student loans are like other loans in that the variable interest rate depends on the borrower’s credit and is also tied to LIBOR and PRIME index rate.
These index rates are representative of how much it cost the lender to borrow money and the interest rates lenders give to borrowers with the best credit, which affects the interest rates offered on a whole. The amount of the interest rate can also be manipulated depending on whether or not fees for the loan will be paid and how much those up front fees will be.
These index rates are representative of how much it cost the lender to borrow money and the interest rates lenders give to borrowers with the best credit, which affects the interest rates offered on a whole. The amount of the interest rate can also be manipulated depending on whether or not fees for the loan will be paid and how much those up front fees will be.
Qualifying and Applying for Alternative Student Loans
There are many differences between federally funded student loans and privately funded students loans, and one of the main differences begins with the qualification process. Unlike federal student loans, those applying for private loans don’t need to complete the Free Application for Federal Student Aid which takes financial need into consideration.
Rather, private loans eligibility is based on the credit score of the borrower. Because of this, it is often a good idea for students trying to obtain a loan to have a co-signer. A co-signer is someone who also enters into the loan serving as a guarantee that they will be responsible for its repayment if the borrower fails to do so. Lenders take both the borrower and co-signer’s credit scores into account when deciding whether or not to issue a loan.
For many students who don’t have a credit score, having a parent or relative act as co-signer is the best, sometimes only, way to receive a loan, and will almost assuredly get the borrower a lower interest rate since it’s based on whomever’s credit score is the highest.
Rather, private loans eligibility is based on the credit score of the borrower. Because of this, it is often a good idea for students trying to obtain a loan to have a co-signer. A co-signer is someone who also enters into the loan serving as a guarantee that they will be responsible for its repayment if the borrower fails to do so. Lenders take both the borrower and co-signer’s credit scores into account when deciding whether or not to issue a loan.
For many students who don’t have a credit score, having a parent or relative act as co-signer is the best, sometimes only, way to receive a loan, and will almost assuredly get the borrower a lower interest rate since it’s based on whomever’s credit score is the highest.
What Are Private Student Loans?
Private student loans are loans which aren’t guaranteed and approved by any government entity. Unlike federal student loans, private student loans are made by banks and other financial institutions using their own terms and qualifications. Like federal student loans, these loans are offered to undergraduate students, graduate students, and parents of students.
Private loans also feature the benefit of a 6-12 month grace period and often offer higher loan limits than federal loans, so a student has a better chance of all their expenses being covered. However, these benefits come at the cost of higher interest rate and loan fees as well as less forgiving terms than those of federal loans. These factors can very well make private loans a more costly option in the end.
Private loans also feature the benefit of a 6-12 month grace period and often offer higher loan limits than federal loans, so a student has a better chance of all their expenses being covered. However, these benefits come at the cost of higher interest rate and loan fees as well as less forgiving terms than those of federal loans. These factors can very well make private loans a more costly option in the end.
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