Where To Find Student Loans For College

A college education may seem trivial to some but to not to most people who want to achieve a better status in life economically and socially. Globalization has made education very important because of the increasing competitiveness among young professionals worldwide.

A college degree has become a prerequisite in getting better work opportunities in any field of discipline. The lack of a college degree can thus put a person at a disadvantage especially when he is applying for a job and his competitors are all college graduates.

It is common knowledge that the income of people is directly proportional to the degrees they have achieved. Thus, a college graduate has better chances of getting a high paying job than a high school graduate. On the other hand, those who have masters' degrees will definitely have higher incomes than those armed with college degrees.

However, getting a college education is so expensive nowadays that only a few can afford to get one. Most families who belong to the low income group could not even send their children to college even if they want to do so. But there are solutions to those who are bent on getting a college education but who do not have the financial capacity.

Students who are eyeing a college education should already start preparing by narrowing the choice of colleges they want to attend as well as the possible expenses that would be incurred in getting that college education.

The family can start and working extra hard so they can contribute to the educational fund of their children or sibling. Planning ahead may also entail postponing or abandoning the family’s vacation plans. The aspiring college student can also take on part time work to build his college education fund.

Qualified families can also avail of student loans offered by the government or by private financial institutions. It is also best to consider the type of student loan one would be getting because there are institutions offering student loans with exorbitant interest rates.

The United States government has acknowledged the importance of getting more Americans to college so it has prepared federal grant options for incoming college students. Federal grants are usually based on the financial requirement of the student and there is no need to maintain a certain grade while in college.

To qualify for the grant, a student must be a first time college student meaning this is your first college course or degree and possesses a high school diploma or its equivalent. Citizenship is not an issue because both American citizens and non citizens who are qualified can avail of the grant.

However, a student must be able to plan on repaying his student loan to avoid being stuck on a long repayment scheme. Most college students who have not planned ahead are still paying for their loans several years after getting their college degrees.

When Should You Consolidate Student Loans

If you have just graduated from college, the likelihood is that you are under a large amount of debt in the form of student loans. You might be wondering if there is any way to reduce the amount you have to pay. One solution for reducing your debt is to consolidate your student loans. Student loan consolidation is similar to refinancing a house on better terms: although the principal of the loan will not be affected, the interest rates you can lock in when you consolidate student loans to a fixed rate can be substantially better, reducing your monthly payments by up to forty percent. Plus, you might be able to stretch out your payment time to reduce your monthly payment amount even further.

The disadvantage when you consolidate student loans during your initial six-month grace period is that you must start making your payments right away. This can be difficult if you have not found a job after graduation, although you can wait until just before the grace period ends to consolidate, and still receive the lower rates. Furthermore, once you have consolidated your student loans, you cannot un-consolidate them again, so make sure to consider your choice carefully.

How is Interest Calculated When I Consolidate Student Loans?

When you consolidate student loans, your lending company pays off your government loan and issues you a new loan under its own name. The typical way to determine the interest rate on the new loan is to take the average interest rates on all of the student loans, and offer a new rate that is an eighth of a percentage point higher (up to a maximum interest rate of 8.25%). Although agreeing to a higher interest rate might not sound like a good reason to consolidate student loans, this rate is fixed over the life of the loan, whereas the government rates will fluctuate. Since rates are at an all time low right now, locking in the current rates might be a good idea. Furthermore, many banks give you ways to bring down the percentage rates. For example, some lending institutions will drop the rate by as much as a quarter point if you agree to automatic deductions from a checking or savings account, whereas others drop the rates after a certain number of timely payments. As an additional bonus, there is no penalty for paying off your consolidated loan early.

Another time to hesitate before you choose to consolidate student loans is when you are close to finishing your payments. Stepping up the payments and saving yourself some interest and the hassle of consolidation might be more advantageous to you.

Student Debt And Student Loans

The statistics show that more and more students are graduating from university with significant debt. The debt levels are growing year on year and many students will be paying them off for years after they graduate. It seems that the consumer addiction to credit and spending has effected the student population just as much as every one else. The fact that most students are not earning anything, and are living either on funds provided by their parents, or on money borrowed, they continue to spend millions each year.

These costs are spread over a variety of areas. Accommodation and other living expenses represent the largest portion of the expenditure. Added to this is travel to and from university, holiday and summer travel expenses, and entertainment. While students are generally financially responsible and not as out of control as many patents would have you think, they do continue to spend a huge proportion of their money on entertainment and socializing.

Employment

Many students will also be working part time during their studies. There are a lot of jobs available and finding one is not a problem for most students who genuinely want one. Employers recognize their flexibility and willingness to work unsociable hours and also that they will generally be happy to accept minimum or close to minimum wage. Therefore, while the jobs are there, they generally pay little, and students who work more than 10-20 hours a week are probably putting a serious strain on their studies and risking their future chances of success.

Most student debt is comprised of student loans. The student loans company based on eligibility criteria provides these. These loans are cheaper than credit that is available on the market from high street banks and have other significant advantages for students. Firstly, students will not have to start repaying the loans until they are earning a set minimum amount, currently around the £15,000 mark. Then there is also the fact that loan repayments are calculated according to earnings levels and are therefore always reasonably affordable. Students are giving as much time as they need to repay the loans and the interest rates, as said before, are very favorable.

Overdrafts

As well as these student loans however, many students will also have other forms of debt. Most banks are offering interest free student overdrafts of up to £2,000 and there are not many students who do not use this up pretty quickly. Then there are bank loans, store cards and credit cards. All of these represent a significant amount of debt that most students are living with.