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Student loans have earned popularity with more people seeking financial help from banking and other financial institution to fund an academic program showing brighter prospects. Long gone are those days when probabilities of an individual in becoming successful were restricted due to economic limitations.
Academic pursuits were largely restricted to financial issues. However, the scenario has completely changed with the banking institutions coming into the picture, offering ample opportunities for learners to get enrolled in higher education programs for a brilliant future.
However, these days default stories have become too common across the globe; why? Simple, former students are being subjected to economic hardships and are unable to repay the outstanding amount. Student loans have become a tedious issue ruling the globe.
Alongside its beneficent side, one should also be aware of its darker aspect that shows immediately after one starts missing out on his/her dues. A certain degree of foresight is needful prior to fetching a loan from a lender.
Additionally, it might seem unbelievable from the student’s perspective but, it is true that the creditor on failing to exert the right efforts in recovering the due, is not allowed to acquire the same. The latter happens to face such a situation if he misses the date.
Situations that might not allow availing a student loan
Students have to drive through rough waters to seek a potential financing option. Why? This is simply because there are situations that restrict them from getting a loan. Let us check out the following unfavorable situations:
If you are above 55 years of age: Oh No!! You have just missed out your chance to get loaned by a financial institution. 55 years of age has a lot to do when you are seeking a loan. In order to obtain a loan, you have to be eligible, age wise. Stepping onto your 55th year would turn unfavorable if you were keen on pursuing one.
If you have been a defaulter previously: This would turn grave on you. Being a defaulter because of a previous loan would land you in trouble. Loans are given to those with a clean credit record.
If you are a bankrupt: Beware if you go bankrupt. This is because you will not be allowed to get financed by a lender on grounds of being bankrupt. Well, that might seem hard to hear but it is as true as the universe. The lenders would disagree in issuing a loan against your name. So, better luck next time !!
Situations that would wholly or partly allow you to obtain a loan
Unlike as mentioned in the aforesaid lines you will be granted student loan even if you are confronting with the following situations:
When benefits are granted on you: say you have been deriving domestic, invalid or widow benefits, the lender would still partially grant you finances for supporting academic expenses. However, such fees need to be essentially course-related.
If you are imprisoned: even a prisoner is allowed student loans if he effectively proves his enrollment in the academic program.
Get Different Types Financial Aid And Student Loan
Being in debt is one of the very last things anyone would ever want to. This is a time of deteriorating economy. One needs to have complete knowledge on how to get the financial aid that could be beneficial. You can see many students who are in debt.
It has been seen through studies that half of the population is in debt for some or other needs. There are many ways to get financial aid and a student loan to the students. There are many kinds of financial aid and a student loan to, which you may apply. Student loans are something that needs attention and importance.
Types of financial aid and student loan
Federal loans are said to be very strict loans as they are defined with their own strict conditions. Before you know the different forms of these financial aids, you need to fill up the FAFSA form. You can do it online or get the form from any government institution like college, libraries etc.
As soon as you fill the form and submit it, the government decides the amount of help that they can provide you. Now, you could see a list of help that you can get from the government. These forms can be student grants, loans, Scholarships.
Half of your fund can be over with scholarships if you have been eligible for getting the scholarships. Other than that you can consider for the loan. Many students try for scholarships but not everyone has it in their hands. So they try out getting other financial aids.
All these kinds of financial aid are helpful in making your dream come true. They have their own benefits and negative points.
Positive aspects of Financial aid and student loan
There are many benefits for applying into this financial aid and student loan. One of the topmost benefits is that you get some financial help to study higher. There could be many reasons for you to get a student loan. Your family may be unable to pay for your education at any time.
This kind of student loan helps you in fulfilling your dream of higher studies. Another positive aspect of getting financial aid and student loans is late repayment. At any time, if you feel that you would not be able to pay the loan amount, you can repay it for some more duration.
If you have applied and got the student loan on your name, you are more of self-confident and responsible for the same. It helps you to be confident about your life and responsibilities to be met.
You need to be very careful with the loan amount and repayment methods. Government and private organizations, both have their own terms and rules for the loan and financial aids. There is always some of the sources that would help you get more information on how to apply for loans.
You need to be very careful with the filling up of form. Filling the form accurately and completely is one thing that would determine to get a loan in an easy manner.
Things You Need To Know While Selecting a Student Loan
If you are a student and confused about which loan to prefer, here are a few things which may help you. Before you select a loan, keep all your options open. Look and search for other alternatives for loans as well.
These loans are given and backed by banks and financial institutions. The interest rate can be higher than the loans provided by the state. The private lenders might charge the interest rate depending on the individual.
These financial institutions are not subjected to the same regulations and rules of federal loans, hence the payment plans and penalties might be stricter.
These loans are managed by the government of the U.S. They are designed especially for students to provide them fair treatment. These offer the best interest rates for students. These loans can be either subsidized or unsubsidized.
The government pays your loan interest when it comes to subsidized loan. For example; if you have taken a loan of $6,000, the government pays the interest rate for and once you graduate, you owe $6,000. But in unsubsidized loan, you have to pay the interest amount as well.
It is almost equal to private loans. You pay the monthly interest, even if the original amount is growing. It is advisable to pay the monthly interest during your college. This way you will only have to pay the original amount when you graduate.
Loan interest rate
This is a percentage which determines the amount of your loan that increases every year. If you take a loan of $6,000 and 5% is the interest rate, your annual interest will be 250$ which makes your total loan amount $6,250. You have to very careful when you decide the interest rate.
This is another area where you should be careful. The length of loan repayment is very important. If you have a lengthy loan repayment period, your monthly payment would be reduced and lower when compared to short period payment. Federal loan repayments follow a ten-year repayment schedule. One of the key benefits of these loans is that you can switch repayment plans as a borrower, without any penalties.
These are few things which you may have to bear in mind before you select a student loan. If you are a parent and are unable to decide on how to finance your child’s education, take help of tax credits. You can easily get tax credits phone number and contact them for further details.
How to Save on Your Student Electric Bills?
The thought of moving into a house with all of your friends for the first time can seem really exciting. However, when it comes down to it there are numerous practicality issues that you will need to resolve as a group if you want to stay on good terms – one of these is paying the electricity bill.
So how should you manage your electricity payments and ensure you aren’t spending too much money?
Take an initial meter reading
When you first move into your student property it is important to take an initial meter reading. This can stop any anomalies when you start getting your bills. It’s also worth calling your energy supplier to tell them your ‘move in’ reading so they have a benchmark for your own usage moving forwards, and don’t accidentally bill you for someone who was in the property before you.
Consider which supplier you are using
If you think you might be able to find a better deal with a different electricity supplier then don’t be afraid to switch providers. Look on the internet for
deals for houses with multiple occupancies or for those who offer discounts on particularly high usage. You may also have experience of another company who you thought offered particularly good service.
Register all tenants’ names
Make sure you don’t get caught out by your housemates and end up with a huge sum to pay to rest on your shoulders at the end of your tenancy. Register everybody’s names with your supplier to ensure that the amount that is owed is divided equally between all tenants and stays fair.
Keep an eye on your usage
Keep checking your meter readings to see how much electricity you are using. If you can you should call your provider with your meter reading to make sure you are just paying for the energy you use, rather than them giving an estimated cost. As you will only be in the property for a short period of time, you don’t want to have overpaid by the end of the tenancy.
Discuss your concerns with housemates
Everyone has different opinions about how much electricity usage is fair. Some may use far more than others and this can cause tensions when it comes to paying bills. Keep an open dialogue and try to discuss any concerns you may have with each other. It is better to air these with your housemates than let it cause arguments and fall-outs further down the line.
Take an end-of-tenancy meter reading
Finally, take the meter reading one more time when you move out and call your supplier to tell them this number and inform them that you will no longer be living in the property. This prevents you from being responsible for any further payment and ensures you only pay for the amount you used whilst living at the house.
Student Loans: A Necessary Evil?
Not everyone is lucky enough to have parents who can afford to pay for their university studies. Some parents can afford to pay for the first year or so but then it’s up to their kids to do well so they can qualify for study grants, bursaries, and students. And some people have to rely on student loans from the get-go. Student loans are vital but they can also be evil, especially when you find yourself still paying off the loan 25 years down the line.
The Mail & Guardian (South Africa) reports that it took US President Barack Obama more than 10 years to pay off his student loans. So, one feels that the man should perfectly understand the predicament in which many people find themselves. The article also reports that student loans in the US have topped the $1 trillion mark, which has many economists worried about another major default crisis.
On the other hand
Forbes says that fears of a crisis are unfounded and provides five reasons why the US public shouldn’t worry. Perhaps the most critical of these reasons is that far fewer people have student loans than mortgages. Of all debt in the US, student loans make up only 8% (mortgages still clock in at 72%). The article adds, however, that if student loans continue to grow at the current rate, the country could start to experience economic drag.
The numbers are scary
According to the Institute for College Access and Success, 67% of students are weighed down by over $25 000 in debt. For individual students, that number can go up to a whopping $310 000. Many students find that upon leaving university their monthly repayments exceed their basic entry-level salaries.
On the other hand
Many students defer loan repayments until they are in a more comfortable position, financially speaking. Sometimes the deferment period is only six months, but even six months grace is better than immediate ulcers and panic attacks, as it gives students a chance to save up some money and climb a litter higher up the salary scale.
There are ways to make student loans easier to bear, at least in the long-term. One of the most obvious tactics is to pay back more than you owe on monthly repayments. It’s a lot to ask a youngster fresh out of varsity, with a low salary and a thriving social life, but no matter the loan, you have to make sacrifices to make the payments. Why not sacrifice a little more now so that you can lessen your burden of debt later on in life?
Be optimistic: graduates with four-year degrees out-earn those with associate degrees and diplomas. You may start on an entry-level salary but it won’t be too long before you start climbing the salary ranks and then you can increase your loan repayments without having to sacrifice all the luxuries.
See if you can negotiate lower interest rates. According to Bet.com, it is sometimes possible to lower your interest rate if you receive statements and pay online.
Of all kinds of debt out there, student loans are considered the ‘best’ because they can be considered an investment and note purely debt. And any investment in your future is well worth the sacrifice.
The Process and Meaning of Student Loan Consolidation
If you are struggling to keep up with your student loan payments, you may have considered consolidating your loans. But before you take the leap, the first step in loan consolidation is to educate yourself on what it really means and how it applies to you.
Nearly all loans can be consolidated – both private and federal – including Subsidized and Unsubsidized Stafford Loans, PLUS Loans, and Perkins Loans. Even certain federal loans that have ended up in default are eligible for consolidation.
When consolidating federal student loans, you have the option between Traditional and Direct Student Loans. Each offers different benefits and repayment periods. Check the Federal Student Aid website for more information.
To consolidate private loans, Chase, NextStudent, Student Loan Network, or Wells Fargo are banks to consider.
By consolidating your student loans, you can stretch out your repayment period, thereby greatly reducing your monthly payments. You may even be able to cut payments by 30 percent or even more. But keep in mind that by lengthening your repayment period, your interest rate will continue to rise, and you will be taking on thousands of dollars more toward your principal balance.
Loan consolidation may not be right for everyone, especially people who are able to keep up with their monthly payments. Remember, loan consolidation means taking out yet another loan, so you’ll need to consider what that means for your credit report.
However, if your credit is going to be damaged more by the inability to make payments in full and on time, taking out another loan may be the lesser of two evils because despite the hit on your credit report. You may want to speak with a financial adviser to determine whether or not loan consolidation is appropriate for your situation.
If you come to the conclusion that consolidation is right for you, it’s time to start the process. First, you’ll need to gather all of your loan information. Gather statements from all of your lenders to determine the payoff for each. Next, do your research. Are you consolidating federal loans, private loans, or both?
In addition to the options mentioned earlier, speak to a financial advisor about what type of loans may be available to you. Remember, not all loans can be consolidated, and you may not be able to actually get a loan for the entire amount you owe.
You’ll also want to shop around at both banks and credit unions to find out what terms and rates are available. After you’ve done your research, you can begin filling out applications. It may take up to a week or even longer before you will begin receiving loan offers. As they arrive, compare their rates and repayment terms before choosing the loan that is best for you.
Living under the weight of student loan payments can be overwhelming, frustrating, and even a bit frightening. Learn how loan consolidation can help simplify your payments and ease your financial burden.
Shed the Defaulted Status with Student Loan
The evaporation of the major banks and corporate firms from the market has cast a dark shadow on the aspiring students. Firstly, the outlook of a better future has vanished. Secondly, they have been buried under the heavy load of loans.
The number of defaulted student is continuously rising each day as more and more students are failing to pay off their loan debts. This has given birth to more unhappiness to the students. They are beginning to lose the Federal benefits from the government as well as the prospect of finding another financial help from the government.
But there are some ways through which you can get certain benefits on your loan debt and repay your loan in an easier way. Sometimes the different mortgage options also come helpful to solve the financial crisis as it provides monetary benefits to clear the outstanding debts.
The Rehabilitation process involves the consecutive payments of a certain amount of your entire debt. The investor generally provides the monthly rehabilitation payment plan. But you need to clear your defaulted student loans status to be eligible for this program.
This program will further help you to restore your status for other federal student financial aids. You can even regain forbearance, deferment, and student loan consolidation options.
A Federal Consolidation program is one of the best student loan forgiveness models and also a debt management tool which helps you to combine all your student loans into a single loan. This program saves your money by simplifying it to a single creditor. With this process, it is relatively easier to check your debt record. Consolidation reduces your monthly payment.
Firstly, it asks you to make an initial payment of a certain amount. If you manage to meet the deadline then the program helps to stretch the remaining amount of the debt to a minimum 10 years of time.
The Reinstatement helps you to come out of your defaulted status. Firstly, you have to pay a certain amount of the whole debt in consecutive six months time. If you achieve this step then you will certainly get away from your defaulted student loan status.
But if you fail to deliver the amount in the first consecutive six months then you won’t be able to regain your status and won’t be eligible for other financial aids.
The latest method to solve monetary problems and pay off the loans is the different mortgages. It generates monthly income which comes useful to lead a healthy post-retirement life. Contacting the insurance company will be ideal to know further about the mortgages.
Student Loans Stunt Homeownership
It’s long been the American dream to complete a college education, find a good job, have a family, and buy a home. Now it seems that dream may be threatened by a looming crisis: student loan debt. What seemed like a good idea when beginning school, might not be the right solution for those who desire property ownership.
Earning a college degree is an admirable and worthy goal. Unfortunately, it is a goal that many current students find unobtainable unless they borrow money to pay tuition. The price of a college education has skyrocketed and there is now more student loan debt (nearly a trillion dollars) than credit card debt in the US. $50 or $100 grand in the big scheme of things might not seem like a lot, until faced with other loan and bank borrowings down the line.
As students graduate and finally emerge with that hard won degree, they must face the reality that they are starting their new life shackled by an anchor of debt and the dream of owning their own home may remain just that…a dream.
College Grads Must Often Delay Purchasing a Home
Traditionally, a large segment of the home buying population was young adults who had recently graduated college and begun working full time. These were the people getting married, starting families, and ready to buy their first house.
Times are changing rapidly, however. Now the majority of recent college graduates must focus on paying down their student loan debt before they can take other major financial steps. A person who owes $40,000 in student loans (many owe much more than that) may be expected to make payments of 5 percent of that amount. Delaying the payments will only end in further financial woes, leaving those in debt stuck in an increasingly difficult situation.
That means they must start paying $1600 a month after they have been out of school for six months. In this economy, many new college graduates with 4-year degrees have difficulty finding jobs that let them bring home much more than that. Rent, itself, can reach or even exceed this amount.
Other Effects Student Loans Have on the Market
With much of their income going to pay student loans every month, more and more college graduates are postponing making major purchases. They put off getting married, keep driving their old car, and renting is their only option. This seems a smart, and frugal idea, as rising adults turn to savings and other financial means to keep afloat.
If a recent graduate does apply for a mortgage, they may find that even if they have perfect credit themselves disqualified because of their debt to income ratio.
It’s now reported that one of every four student loans is in default. Because they are unable to earn enough to keep up with student loan payments, many people find their credit score is critically wounded. If they want to buy a home, former students often don’t qualify for a loan because their credit score is now too low.
The United States government is one of the harshest debt collectors in the World, and they accept very few excuses for late or missed payments of student loans. Punishments may include garnisheeing wages and bank accounts, or even withholding tax returns.
Unlike most other types of debts, a student cannot forego student loan debts through bankruptcy.
The housing market has been struggling for some time now and recovery is slow. Many first time homebuyers are restricted from the market or their purchase is long delayed because the chains of student loan debt hold their finances captive.
Will all students soon find it necessary to choose only one piece of the American dream? Will they have to decide between a college education or a home of their own? It seems many people will not be able to have both if something doesn’t change in the near future.
Student Finance & Future Debt
Student life is an expensive business. It’s estimated that, on average, students that enrolled in 2011 will leave university with £26,100 worth of debt.
And it’s about to get even more expensive as this year’s intake is expected to end university life with a staggering average debt of £53,400. On average, just over three-quarters of this debt will be owed to the Student Loans Company with the rest being made up by a combination of loans from parents and family and borrowing from banks or on credit cards.
So, given that you are expected to leave university with what amounts to a debt of mortgage-like proportions, what is the best way to manage your money while you’re studying? Let’s take a look…
Make sure you’re organized and up to speed
Have you ever played payment roulette when you go to buy something in a shop? You know the game, it’s when you get given the amount you have to pay and then your finger hovers over a couple of cards.
You ask yourself; is there enough in my account so I can use my debit card? Have I maxed out my credit card yet? And then blindly pick a card at random, hand it to the cashier and hope for the best. If so, it needs to stop and the first thing you need to do is get a handle on your finances.
This means finding out how much you have in your account and making a note of when any money comes in and goes out so you know exactly where you’re up to at any given point in the month.
You can make sure you’re more organized by putting up a calendar in your kitchen, or somewhere prominent, that highlights the due dates of all your bills and the amounts to be paid. This way everybody knows when and where the money is going and can budget accordingly.
And you can keep tabs on your account wherever you are by downloading mobile banking apps or by getting regular balance texts from your bank.
Don’t kid yourself
For some, the thought of money sitting in their account fills them with such dread that they have to take it out and spend it as quickly as possible.
However, this is a fast-track route to all kinds of money problems so, when a large sum gets deposited in your account, make sure you know what your real balance is – the balance after all the bills have been paid – and work around that. You need to be honest with yourself about what you can afford and don’t live beyond your means.
It may also be a good idea to set up a separate account, one to cover the bills and one to cover everyday spending and split your cash accordingly. This will ensure that you don’t dip into your rent to get those gig tickets you’ve been after.
Get into the saving habit
If at all possible try to get into the habit of saving, even if it is just a little each month, as this means that you will be prepared for any extra costs such as textbooks, sporting equipment or an unusually high energy bill and won’t have to run up any debt to cover them.
And if you have put aside your monthly savings and then find you still have some money left over then avoid the temptation to go out and spend it and instead put this towards savings too, you can never save too much.
Stick to your budget but don’t be afraid to change it
We all need to stick to our budget – there is no point in having one if we don’t – but you must also maintain some flexibility around your budget. This is especially important if your income and/or expenditure varies from month to month as allowing for fluctuations means you can keep on track a bit easier and not be panicked into throwing things onto a credit card.