Private vs. Federal Loans

The celebration of your college-starting can really be the best time of your life. You almost have it all – the happiness of your parents, your own happiness, your hard work has finally paid off, you can start a new era in your life and change everything. Yes, it is a supreme joy that overwhelms you and your family. However, there is still one partybreaker lurking around – the money, which is from now on to be called the student loan.

 

Certainly, loans for students are a good solution, if you want to have some extra money, or if you’re diligent and you want to pay for the whole college throughout the years. Depending on your preferences and finances, you can choose between federal and private loans. The exact word “loan” does sound like something you know you’re going to regret, but it can save the house budget in the crucial moment.

 

INTEREST

Probably the most relevant difference between private and federal student loans is the charging of the interest. Federal loans have a fixed interest rate, and that is desirable since it means that the rate is not variable, it will not change during time. Private loans are more flexible with these rates, and their interest can vary. You should also know that this is not legally regulated; in other words, there is no legal limit for the interest rate when private loans are in question.

 

Federal loan can be subsidized: for undergraduate students with financial need, the government can pay the interest while you are at college. If you have the unsubsidized loan, then you pay all of the interest, although you can postpone it for several months after you graduate. In the case of a private loan, you alone pay the interest.

 

REPAYMENT

Repayment options are another thing you should consider. For private loans, typical repayment period is approximately twenty years, and monthly payment is not so flexible. Federal student loan has more options: it is adjusted to your income, and monthly payment can be reduced and postponed.

 

FORGIVENESS

If you work in public service, there is an option for federal loan to be partly forgiven. There are so-called Loan Forgiveness Programs that offer the payment of some amount of the loan, under several circumstances (working in public service is one of them). However, it is unlikely that you will get the forgiveness for a private loan, this is currently only regulated for the federal ones.

 

AMOUNT

Certainly, with both federal and private loan, the main problem is the amount that is given to you. Typically, the federal loan does not cover the tuition. Private loans offer more money, but then their interest is greater too. But, it is a good long-term investment, if you are going to be a well-educated individual.

 

COSIGNER

If you’re applying for a private loan, it is very possible that you will need a cosigner. Most students don’t have any credit history, and that is usually necessary for getting this kind of loans. For federal student loans, you don’t need a cosigner in most cases.

 

The financing of the chosen college can be a problem for a student, as well for the whole family. But, it is worth it, that’s for sure. Therefore, if student loans can help you in dealing with the money during the most beautiful part of your life (the college time is unforgettable), then it is a risk worth taking.

Introduction to Student Loan Consolidation

When consolidating student loans, it’s imperative to be familiar with what you’re getting into first. The consolidation of student loans is not a difficult procedure, but it often appears to be for most students. However, there are several regulations and rules you have to keep in mind before you decide to consolidate the loan into a manageable one. Here are some of the most imperative regulations and facts pertaining to student loan consolidation including a basic Introduction to Student Loan Consolidation. Ensure that you understand each of these facts before you go through with the consolidation process.

The Student Loan Consolidation Is Free

You should never pay any fees for consolidating your student loans, the process is totally free. If the lender is charging you to consolidate your loans, you should take your business somewhere else. Many student loan consolidation scams have emerged. These scams are frequently referred to as “advance fee loan scams” and are very common.

You Cannot Consolidate Loans While You’re Still in School

Consolidation of student loans can only be done after your loans enter their grace period, which is six months after dropping out of school or graduation. Consolidation can as well be done once repayment of loans starts, although it is advisable to consider consolidation before this point.

You Can Only Use Your Name to Consolidate the Student Loans

This rule seems obvious, but in cases where the student has their parents’ name on any of the student loans, or is married, it might come into play. Parents and students might consolidate their loans. However, they cannot combine them into one consolidated loan, they must all be separated. The same thing holds true when it comes to married students, who both have the student loan debt. Married students cannot combine their student loan debt into one consolidation loan.

Graduates and Students May Consolidate With Any Lender

There are no restrictions that limit the lender who is eligible for consolidating student loans. Therefore, you might choose whatever lender you wish. This gives you the chance to shop around for the best lender with the best incentives and interest rates. However, always go for lenders who are ready to give you easy and manageable loan repayment terms.

All loans are eligible for consolidation

Any kind of federal student loan can be consolidated, including single student loans. Remember student loan consolidation is a government program that allows students to combine all existing single loans into one manageable loan. With this in mind, any loan from any lender can be put into the mix.

Student loan consolidation is offering former students a great chance of avoiding a life time of debt by providing simpler and easy to pay loans. There are a lot of benefits associated with consolidation. To start with, you will be able to get better interest rates once all the loans have been consolidated. Secondly, it’s easy to focus on repaying one loan than numerous loans from different lenders. In case you have not yet considered consolidating all your student loans, then you are missing out on a lot of advantages. Make sure you give it a thought today!