With the unsteadiness of today's economy and the amount of people getting laid off, more and more people are looking at what they can do to improve their quality of life, and employment! Many people are choosing to go back to school because they have the free time now but also because they are tired of putting everything into a job that won't put anything back into them. Here we'll put together some tips for you to help you get started and to be able to take advantage of the different types of financial aid that is out there including federal student loans.
With the record number of layoffs and unemployment rates, students that weren't eligible for financial aid then could be now. The FAFSA (Free Application for Federal Student Aid) should be filled out every year even if you think you won't qualify.
Deadlines
financial aid applications have deadlines and they should always be met. Different colleges have different deadlines it's up to you to keep on top of the dates. If you miss the date, the schools hands are tied and they will not be able to help you.
Family Contributions
The amount that your family can contribute basically means how much money the parents can add to help offset the expenses of college. This amount is determined by the college and based on the information that was provided in the FAFSA any other financial aid forms that were turned in. The family contribution is given in a dollar amount but not all the time is how much a family will pay. The amounts can vary from college to college.
Total Costs of College
One of the biggest mistakes future students make is that they don't sit down and figure out how much money they need ahead of time. Being ahead of the game is half the battle. You'll need to calculate up costs for textbooks, supplies, and anything else you might need on top of the tuition.
Eligibility vs. Need
If a student is eligible for a Pell grant, the school must and will give out all of the funds to you. This doesn't mean though that you are automatically eligible for any other types of aid. The best thing about the Pell grant is that they don't have to be paid back!
Need based and Merit based
Merit based is only concerned with a students academic performance whereas need based is based on the student's or student's families financial circumstances.
Types of financial aid
There are many different types of financial aid for students. It's important for you to be very versed in what they are and which ones you can qualify for. The reason I'm saying this is because sometimes not all the options are laid out for you when you visit a school. The areas to be aware of are the federal student loans, private student loans, scholarships, and grants.
Showing posts with label college student loan. Show all posts
Showing posts with label college student loan. Show all posts
Wednesday, June 15, 2011
Wednesday, June 8, 2011
Paying for College: Student Loans or Credit Cards?
Research conducted by student loan company Sallie Mae shows that in 2010, about 5 percent of college students paid an average of more than $2,000 in tuition and other educational expenses using a credit card to avoid taking out student loans. The same study showed that 6 percent of parents used credit cards to pay an average of nearly $5,000 in educational expenses for their college children.
Is using credit cards a smart way to avoid college loan debt? Financial advisors are in near-universal agreement that the answer is no, but that isn't stopping thousands of families from using credit cards in place of parent and student loans.
Some families might think that all debt is equal; others might think that they won't qualify for college loans. So what advantages exactly do education loans offer over credit cards?
1) Availability
Particularly in the last few years, as credit card companies have tightened their credit requirements in a retraction of the lax lending that led to the foreclosure crisis, credit cards have become harder to qualify for, available mostly only to consumers with strong credit. Many consumers with weaker credit have had their credit lines reduced or eliminated altogether.
Federal college loans, on the other hand, are available with minimal to no credit requirements. Government-funded Perkins loans and Stafford loans are issued to students in their own name without a credit check and with no income, employment, or co-signer required.
Federal parent loans, known as PLUS loans, have no income requirements and require only that you be free of major adverse credit items - a recent bankruptcy or foreclosure, defaulted federal education loans, and delinquencies of 90 days or more.
In other words, don't turn to credit cards simply because you think you won't qualify for school loans. Chances are, these days, you're more likely to qualify for a federal college loan than for a credit card.
2) Fixed Interest Rates
While most credit cards carry variable interest rates, federal student and parent loans are fixed-rate loans. With a fixed interest rate, you have the security of knowing that your student loan rate and monthly payments won't go up even when general interest rates do.
Many credit cards will also penalize you for late or missed payments by raising your interest rate. Federal school loans keep the same rate regardless of your payment history.
3) Deferred Repayment
Repayment on both federal student loans and federal parent loans can be postponed until six months after the student leaves school (nine months for Perkins undergraduate loans).
With credit cards, however, the bill is due right away, and the interest rate on a credit card balance is generally much higher than the interest rate charged on federal school loans.
If you're experiencing financial hardship, federal loans also offer additional payment deferment and forbearance options that can allow you to postpone making payments until you're back on your feet.
Even most private student loans - non-federal education loans offered by banks, credit unions, and other private lenders - offer you the option to defer making payments until after graduation.
Keep in mind, however, that even while your payments are deferred, the interest on these private student loans, as well as on federal parent loans and on unsubsidized federal student loans, will continue to accrue.
If the prospect makes you nervous of having deferred college loan debt that's slowly growing from accumulating interest charges, talk to your lender about in-school prepayment options that can allow you to pay off at least the interest each month on your school loans so your balances don't get any larger while you're still in school.
4) Income-Based Repayment Options
Once you do begin repaying your college loans, federal loans offer extended and income-based repayment options.
Extended repayment plans give you more time to repay, reducing the amount you have to pay each month. An income-based repayment plan scales down your monthly payments to a certain allowable percentage of your income so that your student loan payments aren't eating up more of your budget than you can live on.
Credit cards don't offer this kind of repayment flexibility, regardless of your employment, income, or financial situation. Your credit card will require a minimum monthly payment, and if you don't have the resources to pay it, your credit card company can begin collection activities to try to recover the money you owe them.
5) Tax Benefits
Any interest you pay on your parent or student loan debt may be tax-deductible. (You'll need to file a 1040A or 1040 instead of a 1040EZ in order to take the student loan interest deduction.)
In contrast, the interest on credit card purchases, even when a credit card is used for otherwise deductible educational expenses, can't be deducted.
To verify your eligibility for any tax benefits on your college loans, consult with a tax advisor or refer to Publication 970 of the IRS, "Tax Benefits for Education," available on the IRS website.
6) Student Loan Forgiveness Programs
Whereas the only way to escape your current credit card debt is to have it written off in a bankruptcy, several loan forgiveness programs exist that provide partial or total student loan debt relief for eligible borrowers.
Typically, these loan forgiveness programs will pay off some or all of your undergraduate and graduate school loan debt in exchange for a commitment from you to work for a certain number of years in a high-demand or underserved area.
The federal government sponsors the Public Loan Forgiveness Program, which will write off any remaining federal education loan debt you have after you've worked for 10 years in a public-service job.
Other federal, state, and private loan forgiveness programs will pay off federal and private student loans for a variety of professionals - veterinarians, nurses, rural doctors, and public attorneys, among others.
Ask your employer and do a Web search for student loan forgiveness programs in your area of specialty.
Is using credit cards a smart way to avoid college loan debt? Financial advisors are in near-universal agreement that the answer is no, but that isn't stopping thousands of families from using credit cards in place of parent and student loans.
Some families might think that all debt is equal; others might think that they won't qualify for college loans. So what advantages exactly do education loans offer over credit cards?
1) Availability
Particularly in the last few years, as credit card companies have tightened their credit requirements in a retraction of the lax lending that led to the foreclosure crisis, credit cards have become harder to qualify for, available mostly only to consumers with strong credit. Many consumers with weaker credit have had their credit lines reduced or eliminated altogether.
Federal college loans, on the other hand, are available with minimal to no credit requirements. Government-funded Perkins loans and Stafford loans are issued to students in their own name without a credit check and with no income, employment, or co-signer required.
Federal parent loans, known as PLUS loans, have no income requirements and require only that you be free of major adverse credit items - a recent bankruptcy or foreclosure, defaulted federal education loans, and delinquencies of 90 days or more.
In other words, don't turn to credit cards simply because you think you won't qualify for school loans. Chances are, these days, you're more likely to qualify for a federal college loan than for a credit card.
2) Fixed Interest Rates
While most credit cards carry variable interest rates, federal student and parent loans are fixed-rate loans. With a fixed interest rate, you have the security of knowing that your student loan rate and monthly payments won't go up even when general interest rates do.
Many credit cards will also penalize you for late or missed payments by raising your interest rate. Federal school loans keep the same rate regardless of your payment history.
3) Deferred Repayment
Repayment on both federal student loans and federal parent loans can be postponed until six months after the student leaves school (nine months for Perkins undergraduate loans).
With credit cards, however, the bill is due right away, and the interest rate on a credit card balance is generally much higher than the interest rate charged on federal school loans.
If you're experiencing financial hardship, federal loans also offer additional payment deferment and forbearance options that can allow you to postpone making payments until you're back on your feet.
Even most private student loans - non-federal education loans offered by banks, credit unions, and other private lenders - offer you the option to defer making payments until after graduation.
Keep in mind, however, that even while your payments are deferred, the interest on these private student loans, as well as on federal parent loans and on unsubsidized federal student loans, will continue to accrue.
If the prospect makes you nervous of having deferred college loan debt that's slowly growing from accumulating interest charges, talk to your lender about in-school prepayment options that can allow you to pay off at least the interest each month on your school loans so your balances don't get any larger while you're still in school.
4) Income-Based Repayment Options
Once you do begin repaying your college loans, federal loans offer extended and income-based repayment options.
Extended repayment plans give you more time to repay, reducing the amount you have to pay each month. An income-based repayment plan scales down your monthly payments to a certain allowable percentage of your income so that your student loan payments aren't eating up more of your budget than you can live on.
Credit cards don't offer this kind of repayment flexibility, regardless of your employment, income, or financial situation. Your credit card will require a minimum monthly payment, and if you don't have the resources to pay it, your credit card company can begin collection activities to try to recover the money you owe them.
5) Tax Benefits
Any interest you pay on your parent or student loan debt may be tax-deductible. (You'll need to file a 1040A or 1040 instead of a 1040EZ in order to take the student loan interest deduction.)
In contrast, the interest on credit card purchases, even when a credit card is used for otherwise deductible educational expenses, can't be deducted.
To verify your eligibility for any tax benefits on your college loans, consult with a tax advisor or refer to Publication 970 of the IRS, "Tax Benefits for Education," available on the IRS website.
6) Student Loan Forgiveness Programs
Whereas the only way to escape your current credit card debt is to have it written off in a bankruptcy, several loan forgiveness programs exist that provide partial or total student loan debt relief for eligible borrowers.
Typically, these loan forgiveness programs will pay off some or all of your undergraduate and graduate school loan debt in exchange for a commitment from you to work for a certain number of years in a high-demand or underserved area.
The federal government sponsors the Public Loan Forgiveness Program, which will write off any remaining federal education loan debt you have after you've worked for 10 years in a public-service job.
Other federal, state, and private loan forgiveness programs will pay off federal and private student loans for a variety of professionals - veterinarians, nurses, rural doctors, and public attorneys, among others.
Ask your employer and do a Web search for student loan forgiveness programs in your area of specialty.
student loans, tax benefits for education
Jeff Mictabor is an enthusiast on the topic of student loan issues in the news. He has been writing for the past 10 years for a variety of education publications. He now offers his writing services on a freelance basis.
Future With Graduate PLUS Loan
With the increased need of higher education for the many students and graduates in the United States of America, there are many education establishments that offer many different major college degrees to those who want a higher education to get a better future for them self. There are of course obstacles for those who are pursuing these improvements. Most people have limited funding to pay for college tuition or are having difficulties in managing their time to work and go to college. More problems for these guys is that if they stop doing their job to focus on their education then they will be unable to pay for their education. For every problem however, there is a solution. As long as you are patient enough, you can search for many financial related solutions for your limited funding problems.
One of the solutions for your problem is the Graduate PLUS loan. The GradPLUS loan or the Graduate PLUS loan is a fixed low interest rate student loan that is guaranteed by the United States Government. While most federal aids are need based and are given without the need of paying them back, the Graduate PLUS loan is designed to be a credit based loan that is guaranteed by the federal government to have a fixed low interest rate. This particular loan is designed to allow you as a graduate student to borrow money as much as the total cost of their graduate school needs. The amount of money that is allowed to be borrowed will be including tuition, your boarding, supplies, laboratory expenses, and your travel expenses. In short, any type of expenses that is related to your education needs can be a subject to this loan.
There are many benefits in getting this type of loan. One of such benefits is in regard of the interest rate the lenders are charging you. While you may get fluctuating rates from a private student loan company, you will not be getting that kind of insecurity if you get your loan from the graduate PLUS loan. You will get a fixed interest rate of 7.9% on your loan. You can compare this to other student loans and I am sure that you will not find many that offers better rate. Another great feat in this loan is that you can defer your payment while you are still studying in school. This way you will not need to get a lame part time job to pay for your loan while you are still in school. You also do not need a co signer to sign for your loan, this would mean that the loan is your own responsibility and as an adult you will be in charge of your own debts. The good thing is for most grad students the interest is tax deductible. That's another load off your shoulders.
To get the loan you would of course need to apply to see if you are eligible or not in receiving the GradPLUS loan. This might be a problem to some students who comes from a rather poor family. With Graduate PLUS loan however, you don't have to worry much because your eligibility is not based on your family or personal income level, your financial need or personal assets. However, you would have to pass a credit check to be eligible of getting a graduate plus loan. After your eligibility to get the loan is confirmed, you can get your loan with a maximum amount of the total amount of your education cost minus the total amount of other financial aid you are receiving. So for an example, you are having financial aid from a student grant program for $20,000 and you want to apply for a graduate PLUS loan. The maximum amount of money you can borrow would be the total cost of your education cost (lets say $50,000) minus your other financial aid of $20,000. With this formula then you can borrow up to $30,000 on your graduate PLUS loan.
If you succeed in getting the loan, your lender will be sending your funds to your school. Your school will then disbursed your funds in at the very least two installments. These installments amounts will not exceed half of the loan amount you were granted. These funds will be then allocated to pay your tuition and other education expenses you might be having. You would have to spend all these loans for your educational expenses, so how the loan is used will be monitored very closely. To make it easier for you, if you already qualified for a Graduate PLUS Loan you will not be required to have an adverse credit history or have extensive credit reports like some private education loan lenders would be asking of you. This is why you should really try and apply for this type of loan to make your future brighter by having a major degree.
One of the solutions for your problem is the Graduate PLUS loan. The GradPLUS loan or the Graduate PLUS loan is a fixed low interest rate student loan that is guaranteed by the United States Government. While most federal aids are need based and are given without the need of paying them back, the Graduate PLUS loan is designed to be a credit based loan that is guaranteed by the federal government to have a fixed low interest rate. This particular loan is designed to allow you as a graduate student to borrow money as much as the total cost of their graduate school needs. The amount of money that is allowed to be borrowed will be including tuition, your boarding, supplies, laboratory expenses, and your travel expenses. In short, any type of expenses that is related to your education needs can be a subject to this loan.
There are many benefits in getting this type of loan. One of such benefits is in regard of the interest rate the lenders are charging you. While you may get fluctuating rates from a private student loan company, you will not be getting that kind of insecurity if you get your loan from the graduate PLUS loan. You will get a fixed interest rate of 7.9% on your loan. You can compare this to other student loans and I am sure that you will not find many that offers better rate. Another great feat in this loan is that you can defer your payment while you are still studying in school. This way you will not need to get a lame part time job to pay for your loan while you are still in school. You also do not need a co signer to sign for your loan, this would mean that the loan is your own responsibility and as an adult you will be in charge of your own debts. The good thing is for most grad students the interest is tax deductible. That's another load off your shoulders.
To get the loan you would of course need to apply to see if you are eligible or not in receiving the GradPLUS loan. This might be a problem to some students who comes from a rather poor family. With Graduate PLUS loan however, you don't have to worry much because your eligibility is not based on your family or personal income level, your financial need or personal assets. However, you would have to pass a credit check to be eligible of getting a graduate plus loan. After your eligibility to get the loan is confirmed, you can get your loan with a maximum amount of the total amount of your education cost minus the total amount of other financial aid you are receiving. So for an example, you are having financial aid from a student grant program for $20,000 and you want to apply for a graduate PLUS loan. The maximum amount of money you can borrow would be the total cost of your education cost (lets say $50,000) minus your other financial aid of $20,000. With this formula then you can borrow up to $30,000 on your graduate PLUS loan.
If you succeed in getting the loan, your lender will be sending your funds to your school. Your school will then disbursed your funds in at the very least two installments. These installments amounts will not exceed half of the loan amount you were granted. These funds will be then allocated to pay your tuition and other education expenses you might be having. You would have to spend all these loans for your educational expenses, so how the loan is used will be monitored very closely. To make it easier for you, if you already qualified for a Graduate PLUS Loan you will not be required to have an adverse credit history or have extensive credit reports like some private education loan lenders would be asking of you. This is why you should really try and apply for this type of loan to make your future brighter by having a major degree.
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