13 May, 2007
Student Loans and Consolidation Programs - How To Take Advantage To Help Your Education
If you're seriously interested in knowing about student loans, you need to think beyond the basics. This informative article takes a closer look at things you need to know about student loans and consolidation loans to help with your education.
The primary factor to keep in mind regarding a student loan is that it is not a determent or expense but rather an investment, for yourself. When you finish your college education, it will lead you to a satisfying job and more earnings during the course of your career.
Never let the weights of your student loans influence your credit. Take into consideration of consolidating your loans so it will be easier for you to pay them back.
A student consolidation loan program permits students to join together all unsettled and unpaid loans. For instance, when a certain student has four separate or individual loans, all can be consolidated into just one loan, if the student chooses to. Theoretically, all four loans will be regarded as paid and another loan will begin as replacement.
Check before getting a student loan or consolidation loan rate and plan of payment before you sign up.
See how much you can learn about student loans when you take a little time to read a well-researched article? Don't miss out on the rest of this great information.
The most evident way to acquiring the best student consolidation loan payment and rates is by possessing good credit. It will be easy to acquire an excellent student consolidation loan plan if one has a credit score more than 660 (FICO score). However, there are also a lot of ways to acquire the best student consolidation loan payment plans and rates.
A quick Internet search and examination on credit scores and FICO is needed in order for you to learn and get the information necessary so you can analyze your credit score.
Being aware of your credit history is one way to check your chances of acquiring the best student consolidation loan rates. Regularly examining records or documents of your finances is one good habit and can be of great help to determine your "student-loan-worthiness."
Student loan consolidation rates and programs can differ from one person to another. The rates being offered are based on one’s financial standing and credit. Generally, if one has a FICO score of 600 or less, getting a suitable student consolidation loan rate and proposal can be a challenge.
The primary factor to keep in mind regarding a student loan is that it is not a determent or expense but rather an investment, for yourself. When you finish your college education, it will lead you to a satisfying job and more earnings during the course of your career.
Never let the weights of your student loans influence your credit. Take into consideration of consolidating your loans so it will be easier for you to pay them back.
A student consolidation loan program permits students to join together all unsettled and unpaid loans. For instance, when a certain student has four separate or individual loans, all can be consolidated into just one loan, if the student chooses to. Theoretically, all four loans will be regarded as paid and another loan will begin as replacement.
Check before getting a student loan or consolidation loan rate and plan of payment before you sign up.
See how much you can learn about student loans when you take a little time to read a well-researched article? Don't miss out on the rest of this great information.
The most evident way to acquiring the best student consolidation loan payment and rates is by possessing good credit. It will be easy to acquire an excellent student consolidation loan plan if one has a credit score more than 660 (FICO score). However, there are also a lot of ways to acquire the best student consolidation loan payment plans and rates.
A quick Internet search and examination on credit scores and FICO is needed in order for you to learn and get the information necessary so you can analyze your credit score.
Being aware of your credit history is one way to check your chances of acquiring the best student consolidation loan rates. Regularly examining records or documents of your finances is one good habit and can be of great help to determine your "student-loan-worthiness."
Student loan consolidation rates and programs can differ from one person to another. The rates being offered are based on one’s financial standing and credit. Generally, if one has a FICO score of 600 or less, getting a suitable student consolidation loan rate and proposal can be a challenge.
3 factors to remember with student loans
1. Remember too, that even if consolidation can make loan repayment easier and decrease your payment each month, it can also indicate an increase in the total outlay of paying back your loans. Consolidation offers lesser amount in monthly payments by granting borrowers a maximum of thirty years to pay back their loans; you create a lot of payments as well as pay extra in interest.
2. In fact, there are situations wherein consolidation doubles the total interest cost; so if you don't really require monthly payment assistance, you must evaluate the cost of paying back your loans which where unconsolidated in contrast to the cost of paying back a loan consolidation.
3. Note that the moment you consolidate your student loans, they are all used up and you can never go back. With the fact that you can only consolidate only once, you have to be certain that it's the best and guaranteed financial attempt that you can generate before carrying on.
2. In fact, there are situations wherein consolidation doubles the total interest cost; so if you don't really require monthly payment assistance, you must evaluate the cost of paying back your loans which where unconsolidated in contrast to the cost of paying back a loan consolidation.
3. Note that the moment you consolidate your student loans, they are all used up and you can never go back. With the fact that you can only consolidate only once, you have to be certain that it's the best and guaranteed financial attempt that you can generate before carrying on.
3 Advantages of Student Loan Consolidation
1. It is simple and convenient. When you have multiple loans, this means making several monthly payments; with this comes a lot of paperwork as well as keeping track of a lot of different due dates. With a student loan consolidation, there will only be one loan payment every month, making it more manageable.
2. Students can save money. For instance, a student having four unsettled loans can be obliged to pay $150 every month to all four lenders, which will amount to a total of $600 every month. After consolidation however, you are only required a single payment each month which will be of a lesser amount compared to all four payments combined. This can be an enormous saving for such students just starting on their jobs and do not have yet the wages or earnings needed to pay such a large amount of loan immediately.
3. It can open up added opportunities. Students can be granted deferment options as well as extra repayment chances. This additional flexibility may be beneficial for certain students wanting to continue or resume their schooling further, striving to locate employment or going through financial difficulty.
2. Students can save money. For instance, a student having four unsettled loans can be obliged to pay $150 every month to all four lenders, which will amount to a total of $600 every month. After consolidation however, you are only required a single payment each month which will be of a lesser amount compared to all four payments combined. This can be an enormous saving for such students just starting on their jobs and do not have yet the wages or earnings needed to pay such a large amount of loan immediately.
3. It can open up added opportunities. Students can be granted deferment options as well as extra repayment chances. This additional flexibility may be beneficial for certain students wanting to continue or resume their schooling further, striving to locate employment or going through financial difficulty.
Student Loan Consolidation - How To Get The Best Rates And Plans?
Student loan consolidation can have many benefits for the career minded student. With the prices of things going through the roof, going to college can be very costly. Many students don’t have thousands of dollars to pay their way through college.
This is why many college students use student loans to get themselves through college. When it comes time to pay back their student loans, it can be a real burden and a distraction from their career.
Before you sign up on the dotted line, you should know how to get the best student loan consolidation rate and plan for your financial needs. If you are tired of too many bills and monthly due dates, it just might be time to find the best student loan consolidation rate and plan that you can qualify for.
What Is The Idea Behind Student Loan Consolidation?
When a student first applied for several student loans from several different agencies and student loan providers, they each gave a different interest rate and term for paying back the loans. The idea of student loan consolidation, is to take all the different student loans and put them into one easy convenient loan. You then only have to make one monthly loan payment every month, instead of several loan payments every month over time. This saves the student both time and money. Having a lower interest rate and less checks to write every month are a couple of advantages of doing a student loan consolidation.
Credit Check Before You Get Student Loan Consolidation Rates And Payment Plans
The most obvious way to get the best student loan consolidation rates and payments, is by having great credit. It’s easy to get great student loan consolidation plans with a credit score, also known as FICO, over 660. But, there are several ways to get the best student loan consolidation rates and payment plans.
You can do a simple online search on FICO and credit scores to find the information you need to check out your credit score. Knowing your credit information should be your first step to getting the best student loan consolidation rates. With knowledge, you will get the best student loan consolidation rates for your financial and credit situation.
Student loan consolidation rates and plans can vary from person to person. The loan rates offered will be based on your financial situation and credit. With a FICO credit score under 600, it can be a challenge to get a good student loan consolidation rate and plan in most cases.
This is why many college students use student loans to get themselves through college. When it comes time to pay back their student loans, it can be a real burden and a distraction from their career.
Before you sign up on the dotted line, you should know how to get the best student loan consolidation rate and plan for your financial needs. If you are tired of too many bills and monthly due dates, it just might be time to find the best student loan consolidation rate and plan that you can qualify for.
What Is The Idea Behind Student Loan Consolidation?
When a student first applied for several student loans from several different agencies and student loan providers, they each gave a different interest rate and term for paying back the loans. The idea of student loan consolidation, is to take all the different student loans and put them into one easy convenient loan. You then only have to make one monthly loan payment every month, instead of several loan payments every month over time. This saves the student both time and money. Having a lower interest rate and less checks to write every month are a couple of advantages of doing a student loan consolidation.
Credit Check Before You Get Student Loan Consolidation Rates And Payment Plans
The most obvious way to get the best student loan consolidation rates and payments, is by having great credit. It’s easy to get great student loan consolidation plans with a credit score, also known as FICO, over 660. But, there are several ways to get the best student loan consolidation rates and payment plans.
You can do a simple online search on FICO and credit scores to find the information you need to check out your credit score. Knowing your credit information should be your first step to getting the best student loan consolidation rates. With knowledge, you will get the best student loan consolidation rates for your financial and credit situation.
Student loan consolidation rates and plans can vary from person to person. The loan rates offered will be based on your financial situation and credit. With a FICO credit score under 600, it can be a challenge to get a good student loan consolidation rate and plan in most cases.
7 Aspects To Consider With Student Loan Consolidation Plans
1. Lower Monthly Payments. Depending on your student loan situation and the type of lender you choose, you may be able to lower your monthly payments by up to 50%
2. Having Simple Loan Payments. By consolidating your student loans, you only have one loan payment per month and one check to write. This is very beneficial if you are writing several checks every month to multiple lenders.
3. Having Fixed Interest Rates. With some federal consolidation loans you can have a fixed rate for the life of your student loan. It’s best to do research to see what the best interest rates and term you are eligible for. You can check online to calculate the interest rate on a new student consolidation loan based on the rates of your current student loans. You can then round up to the nearest 1/8th of a percent of the weighted average of the interest rates on your eligible student loans.
4. Extending Your Payment Period. You may have a lot of student loan debt. With federal consolidation loans you may be able to extend the payment term up to 30 years. It’s a good idea to realize you will end up paying more interest over the life of your student loan consolidation. The idea is to get some leverage until your career takes off. You can focus on making money instead of several monthly loan payments.
5. In School Consolidation Programs. While still in school, eligible students can lock in a low rate. This would put you into repayment status, but since you are still in school, you are automatically put into deferment. The drawback of consolidating your loans while in school, is that you lose your 6 month grace period. The solution to this would be to request forbearance for up to 1 year on your student loan consolidation. Here again you can do some research and get more information online.
6. Lower Interest Rate. Student loan consolidation can save you thousands of dollars. You may be using credit cards with 10% to 28% interest trying to keep up with your bills. This can cost you thousands of dollars when you pay the minimum monthly payments on high interest credit card debt. Having a student loan consolidation may be your best option if you can get lower interest rates when consolidating your student loans.
7. New Interest Rates. With a new student loan consolidation, you may be able to get a much better interest rate. Interest rates are now at an all time low. You may have been paying on debt you built up from several years ago, at high interest rates. Things change over time in the financial industry.
Resources Online For Student Loan Consolidation Rates And Payment Plans
With today’s Internet resources, you have an advantage when looking for the best student loan consolidation rates and plans online. If you take some time to do research on the process of getting the best student loan consolidation rates and plans, you may be able to save yourself the high costs on student loan consolidation.
Online website services can make it easy to see if you qualify. There are many tools and ideas online to help you get the best rates and plans available for your student loan consolidation needs.
2. Having Simple Loan Payments. By consolidating your student loans, you only have one loan payment per month and one check to write. This is very beneficial if you are writing several checks every month to multiple lenders.
3. Having Fixed Interest Rates. With some federal consolidation loans you can have a fixed rate for the life of your student loan. It’s best to do research to see what the best interest rates and term you are eligible for. You can check online to calculate the interest rate on a new student consolidation loan based on the rates of your current student loans. You can then round up to the nearest 1/8th of a percent of the weighted average of the interest rates on your eligible student loans.
4. Extending Your Payment Period. You may have a lot of student loan debt. With federal consolidation loans you may be able to extend the payment term up to 30 years. It’s a good idea to realize you will end up paying more interest over the life of your student loan consolidation. The idea is to get some leverage until your career takes off. You can focus on making money instead of several monthly loan payments.
5. In School Consolidation Programs. While still in school, eligible students can lock in a low rate. This would put you into repayment status, but since you are still in school, you are automatically put into deferment. The drawback of consolidating your loans while in school, is that you lose your 6 month grace period. The solution to this would be to request forbearance for up to 1 year on your student loan consolidation. Here again you can do some research and get more information online.
6. Lower Interest Rate. Student loan consolidation can save you thousands of dollars. You may be using credit cards with 10% to 28% interest trying to keep up with your bills. This can cost you thousands of dollars when you pay the minimum monthly payments on high interest credit card debt. Having a student loan consolidation may be your best option if you can get lower interest rates when consolidating your student loans.
7. New Interest Rates. With a new student loan consolidation, you may be able to get a much better interest rate. Interest rates are now at an all time low. You may have been paying on debt you built up from several years ago, at high interest rates. Things change over time in the financial industry.
Resources Online For Student Loan Consolidation Rates And Payment Plans
With today’s Internet resources, you have an advantage when looking for the best student loan consolidation rates and plans online. If you take some time to do research on the process of getting the best student loan consolidation rates and plans, you may be able to save yourself the high costs on student loan consolidation.
Online website services can make it easy to see if you qualify. There are many tools and ideas online to help you get the best rates and plans available for your student loan consolidation needs.
Student Loan Consolidation Rates - Helpful Tips
Student loan consolidation has many benefits. Before you sign up on the dotted line, you should know how to get the best student loan rates. If you are tired of too many bills and monthly due dates, it may be time to find the best student consolidation loan you qualify for.
The most obvious way to get the best student consolidation loan rates, is by having great credit. It’s easy to get great student consolidation loan rates with a FICO score over 660. But, there are several ways to get the best student consolidation loan rates.
Know Your Credit Before Shopping For Student Consolidation Loan Rates
By doing a simple Google or Yahoo search on FICO and credit scores to find the information you need to check out your credit score. This really should be your first step to getting the best student consolidation loan rates. With knowledge, you will get the best student loan consolidation rates for your financial situation.
Student consolidation loan rates can vary from person to person. The student consolidation loan rates offered will be based on your financial situation and FICO score. With a FICO score under 600, you will have a tough time getting a good student consolidation loan rate.
Refinancing And Home Equity Loans Used For Student Loan Consolidation
With a home equity loan, you can get the best student consolidation loan rates possible with good credit. Secured by your home, a student consolidation loan can help get rid of your high credit card rates and loans. You will have less bills to pay, with the best student consolidation loan rates to lower your interest on several loans.
Refinancing your home mortgage may be an option to get the best student loan consolidation rates.
The important thing to remember with home equity loans and refinancing, is to be logical and don’t let your emotions get the best of you. You may get the best student consolidation loan rates available, but you still have to pay back the loan over time.
It’s best to take the time to sit down and research all your options that are available to you to get the best loan and interest rate.
Resources Online For Getting The Best Student Loan Consolidation Rates
With today’s Internet resources, you have an advantage when looking for the best student loan consolidation rates online. Take time to get educated on the process of getting the best student consolidation loan rates, and you can save yourself thousands of dollars on the student consolidation loan rates available, with just a few clicks of the mouse.
The idea is to combine all your current debts that you owe into one large debt with the lowest interest rate possible. Instead of making monthly payments on several high interest loans ranging from 12% to 28%, you can make one payment each month to one company.
Today’s career minded students can get help with the burden of having several student loans. You can focus on your career, instead of losing sleep over paying several monthly loan payments. Student loan consolidation can be the solution with many advantages. With today’s Internet technology, you can get a student loan consolidation quickly and easily.
The most obvious way to get the best student consolidation loan rates, is by having great credit. It’s easy to get great student consolidation loan rates with a FICO score over 660. But, there are several ways to get the best student consolidation loan rates.
Know Your Credit Before Shopping For Student Consolidation Loan Rates
By doing a simple Google or Yahoo search on FICO and credit scores to find the information you need to check out your credit score. This really should be your first step to getting the best student consolidation loan rates. With knowledge, you will get the best student loan consolidation rates for your financial situation.
Student consolidation loan rates can vary from person to person. The student consolidation loan rates offered will be based on your financial situation and FICO score. With a FICO score under 600, you will have a tough time getting a good student consolidation loan rate.
Refinancing And Home Equity Loans Used For Student Loan Consolidation
With a home equity loan, you can get the best student consolidation loan rates possible with good credit. Secured by your home, a student consolidation loan can help get rid of your high credit card rates and loans. You will have less bills to pay, with the best student consolidation loan rates to lower your interest on several loans.
Refinancing your home mortgage may be an option to get the best student loan consolidation rates.
The important thing to remember with home equity loans and refinancing, is to be logical and don’t let your emotions get the best of you. You may get the best student consolidation loan rates available, but you still have to pay back the loan over time.
It’s best to take the time to sit down and research all your options that are available to you to get the best loan and interest rate.
Resources Online For Getting The Best Student Loan Consolidation Rates
With today’s Internet resources, you have an advantage when looking for the best student loan consolidation rates online. Take time to get educated on the process of getting the best student consolidation loan rates, and you can save yourself thousands of dollars on the student consolidation loan rates available, with just a few clicks of the mouse.
The idea is to combine all your current debts that you owe into one large debt with the lowest interest rate possible. Instead of making monthly payments on several high interest loans ranging from 12% to 28%, you can make one payment each month to one company.
Today’s career minded students can get help with the burden of having several student loans. You can focus on your career, instead of losing sleep over paying several monthly loan payments. Student loan consolidation can be the solution with many advantages. With today’s Internet technology, you can get a student loan consolidation quickly and easily.
Student Loan Consolidation - Is It Right For You?
You can benefit from student loan consolidation, but there are things you should consider. It’s a good idea to start looking into how you can consolidate your student loans before the 6 month grace period ends. Big monthly student loan payments can be very stressful when starting a new job. When the bills are out of control and you’re stressing out about how to keep track of when payments are due, it might be time to consider a student loan consolidation as an option.
When Should I Consolidate My Student Loans?
There has never been a better time than now to take advantage of the lowest interest rates in recent history. You can get the best deals for consolidating your loans and to lower those monthly loan payments. Student loan consolidation can save you hundreds of dollars on repaying your student loan with a lower interest rate.
What Is Student Loan Consolidation?
When a student first applied for loans from several different government agencies and loan providers, they each gave a different interest rate and term for paying back the loans. The idea of student loan consolidation is to take all the different loans and put them into one simple and easy convenient loan. You then only make one monthly loan payment each month over time. This saves you both time and money by having a lower interest rate and less checks to write every single month.
3 Benefits Of Getting A Student Loan Consolidation
1. Lower Interest Rate. Student loan consolidation can save you thousands of dollars.You may be using credit cards with 12% to 28% interest trying to keep up with your bills. This can cost you thousands of dollars when you pay the minimum monthly payments on high interest credit card debt. Having a student loan consolidation may be your best option if you can get lower interest rates when consolidating your student loans.
2. New Interest Rates. With a new student loan consolidation, you may be able to get a much better interest rate. Interest rates are now at an all time low. You may have been paying on debt you built up from several years ago, at high interest rates. Things change over time in the financial industry.
3. Relieve Stress. With a student loan consolidation you don’t have to worry about several monthly loan payments and due dates. This in itself, can make a student loan consolidation worth your while. You can focus on your new career, instead of those nagging loan payments every month.
Student Loan Consolidation Online And Internet Services To Help You
Now you can get a student loan consolidation online quickly and easily. The Internet makes research and finding good consolidation loan programs as easy as a few clicks of your computer mouse. You can get done in a day, what used to take several weeks. You can learn everything you need to know from information sites that provide the latest news, resources, tools and data in regards to student loan consolidation.
This empowers you to get the best deal on student loan consolidation. With a few clicks of the mouse, you can get loan quotes and compare loan companies that are competing for your business.
When Should I Consolidate My Student Loans?
There has never been a better time than now to take advantage of the lowest interest rates in recent history. You can get the best deals for consolidating your loans and to lower those monthly loan payments. Student loan consolidation can save you hundreds of dollars on repaying your student loan with a lower interest rate.
What Is Student Loan Consolidation?
When a student first applied for loans from several different government agencies and loan providers, they each gave a different interest rate and term for paying back the loans. The idea of student loan consolidation is to take all the different loans and put them into one simple and easy convenient loan. You then only make one monthly loan payment each month over time. This saves you both time and money by having a lower interest rate and less checks to write every single month.
3 Benefits Of Getting A Student Loan Consolidation
1. Lower Interest Rate. Student loan consolidation can save you thousands of dollars.You may be using credit cards with 12% to 28% interest trying to keep up with your bills. This can cost you thousands of dollars when you pay the minimum monthly payments on high interest credit card debt. Having a student loan consolidation may be your best option if you can get lower interest rates when consolidating your student loans.
2. New Interest Rates. With a new student loan consolidation, you may be able to get a much better interest rate. Interest rates are now at an all time low. You may have been paying on debt you built up from several years ago, at high interest rates. Things change over time in the financial industry.
3. Relieve Stress. With a student loan consolidation you don’t have to worry about several monthly loan payments and due dates. This in itself, can make a student loan consolidation worth your while. You can focus on your new career, instead of those nagging loan payments every month.
Student Loan Consolidation Online And Internet Services To Help You
Now you can get a student loan consolidation online quickly and easily. The Internet makes research and finding good consolidation loan programs as easy as a few clicks of your computer mouse. You can get done in a day, what used to take several weeks. You can learn everything you need to know from information sites that provide the latest news, resources, tools and data in regards to student loan consolidation.
This empowers you to get the best deal on student loan consolidation. With a few clicks of the mouse, you can get loan quotes and compare loan companies that are competing for your business.
Getting Private Student Loans For 2007
If you are considering options to federal aid for funding your education, one of them is likely to be private student loans. This option provides an additional source of funding for those who are looking for a supplement to federal aid and will enable them to purse their dreams of higher education.
Private student loans have their own advantages. To illustrate, applicants can get loans for more than $20,000 and this usually takes only a few minutes to approve. Another good point, unlike federal aid, is that there are no application deadlines. This means anyone can apply at any time by simply approaching one of the accredited education institution. Furthermore, private aid is awarded on creditworthiness. and not on need-based criteria.
Usually, the interest rate of student loans are fixed and borrowers need not worry about fluctuating rates that would increase the interest payments. Besides this, private college loans offer affordable repayment options comparable to federal student loans.
However, there is a difference between the repayment period for private and federal student loan. The maximum repayment terms for a private loan is currently fixed at 15 years, which is much lesser than the 30 years limit for federal student aid.
On the other hand, private student loan holders forego other vital benefits given by federal loan. To illustrate, if a federal student loan holder becomes disabled or deceased, the loans are forgiven making repayment unnecessary. Private loan holders' heirs would have to repay the loans in full from the deceased's estate. Even the disabled and unemployed are still liable for their debt. This is different from federal loan where the federal government provides an alternative to the hardship of unaffordable loan repayment by writing off the entire loan.
As we have seen above, private student loans are only valuable when filling the gap between total college expenses and a borrower's awarded financial aid. To use private student loans as a substitution to federal aid, rather than a supplement is short-sighted on the part of the borrower. Hence, it is advisable to consider the pros and cons of a private student loan before you make the correct decision.
Private student loans have their own advantages. To illustrate, applicants can get loans for more than $20,000 and this usually takes only a few minutes to approve. Another good point, unlike federal aid, is that there are no application deadlines. This means anyone can apply at any time by simply approaching one of the accredited education institution. Furthermore, private aid is awarded on creditworthiness. and not on need-based criteria.
Usually, the interest rate of student loans are fixed and borrowers need not worry about fluctuating rates that would increase the interest payments. Besides this, private college loans offer affordable repayment options comparable to federal student loans.
However, there is a difference between the repayment period for private and federal student loan. The maximum repayment terms for a private loan is currently fixed at 15 years, which is much lesser than the 30 years limit for federal student aid.
On the other hand, private student loan holders forego other vital benefits given by federal loan. To illustrate, if a federal student loan holder becomes disabled or deceased, the loans are forgiven making repayment unnecessary. Private loan holders' heirs would have to repay the loans in full from the deceased's estate. Even the disabled and unemployed are still liable for their debt. This is different from federal loan where the federal government provides an alternative to the hardship of unaffordable loan repayment by writing off the entire loan.
As we have seen above, private student loans are only valuable when filling the gap between total college expenses and a borrower's awarded financial aid. To use private student loans as a substitution to federal aid, rather than a supplement is short-sighted on the part of the borrower. Hence, it is advisable to consider the pros and cons of a private student loan before you make the correct decision.
College Finance: money for nothing
If you've earned a high school diploma and you're ready to take the prestigious leap for a higher education, be prepared for sticker shock. The costs of a college degree can be astronomical. But with the right combination of scholarships, college student loans and work-study programs, you can make the leap without landing yourself in heavy debt.
Plan A: Money for nothing. Here are two proven sources of money, which can help you cover costs without costing a dime:
Scholarships. There are an enormous range of scholarships, which are financial grants given to students for academic, athletic or artistic merit. There is also a wide range of unusual scholarships based on virtually everything from where you live to where your ancestors lived. Start searching for the scholarship that matches your profile.
Financial aid based on lower income. Other alternatives exist beyond scholarships and students loans. Based on your income, you may also be able to receive financial aid from the government or an individual school.
Plan B: Interest rates and elbow grease. You can also borrow funds or work off the cost of college in the following ways:
- Federal and private loans. One of the most popular ways to finance college is through a student loan. There are government, as well as private, loans. Federal student loans include Stafford Loans for students and PLUS Loans for parents. These tend to be the most cost-effective. Private student loans are also very competitive and involve much less paperwork.
- Work study and career-specific financing. Many colleges offer work-study programs, the equivalent of washing dishes in a restaurant to pay for your dinner. Specific trades-such as nursing or the military-offer co-op programs, in which you work for a participating company while you're going to school.
If you're like most students, you'll opt for a combination of the above options. Used wisely, they can help forward your education without pushing you backwards into serious debt. And the long-term rewards-intellectual growth and enhanced earning power-will be worth every penny.
10 Things to Know About Mortgages
I became a first-time homeowner two years ago, and in the process I learned a lot about mortgages -- many things surprisingly interesting or unexpected. Here are 10 things that you may not know about mortgages.
1. You can buy a house with a down payment of as little as 0%. That's right, no down payment at all; 100% financed via a mortgage. You may even find a government agency that will help with your closing costs. These options aren't available to everyone, but first-time homeowners and/or homebuyers of limited means may be able to find good deals here and there.
2. Adjustable rate mortgages (ARMs) come in many varieties. You might think of an ARM as a mortgage with an interest rate that goes up or down each year. Some ARMs do work that way, but consider this: If you're pretty sure you'll be staying in your home for just five or six years, you can get something called a "5-1" ARM, where the rate is fixed for the first five years, after which it fluctuates each year. Whereas 30-year fixed mortgage rates can be as low as around 5.5% these days, 5-1 ARMs are in the 4.5% range. That 5-1 ARM might save you $100 per month, or $1,200 per year. There are 7-1 ARMs, 10-1 ARMs, and many other related beasts as well.
3. Adjustable rate mortgages are generally limited in how much they can adjust each year. Naive renter that I was, I always assumed that ARMs were especially risky, because if interest rates skyrocket over one or two years, your mortgage rate will also skyrocket. Fortunately, I learned that ARMs typically have caps on how much rates can increase each year. (Still, over the long run, they can increase a lot.)
4. Small changes in interest rates can make a big difference. Imagine that you recently got a 30-year fixed mortgage on a $200,000 house at 6.5% with a 20% down payment. That results in a monthly mortgage payment of roughly $1,011. You might not think it's worth refinancing now, with rates around 5.625%, but think again. The same mortgage at that interest rate results in monthly payments of about $921. The difference per month? $90, or $1,080 per year. If closing costs on the refinancing will be $2,000, just divide that by $90 to see how many months it will take before you break even: 22. So if you're planning to live in your home for at least two years, refinancing may well be worth it.
5. Mortgage brokers can be very useful for many people. My uncle is actually a mortgage broker, but I'd never really discussed mortgages with him until I began house-hunting. A good mortgage broker will advise you on what kinds of mortgages would best suit you, and will find you the best rate and deal that he or she can, searching through the loan products of many lenders. Of course, just as with many professions, there are conflicts of interest in the mortgage broker biz that can result in you getting ripped off. One way to avoid that is to read up on the topic and to seek out ethical mortgage brokers. The Mortgage Professor's website is a good place to learn more.
6. Not everyone needs a mortgage broker. Mortgage brokers tend to be most useful when you've got some financial issues, such as a poor credit history. If you've got a pristine credit report and plan to put at least 20% down on your new home, you may be able to just walk into a few local banks and ask for their best rates.
7. You might find even more attractive mortgage rates from your local credit union. For example, at the time of this writing, my local bank is offering 30-year fixed-rate mortgages for 5.625% (with no points). But a credit union to which I belong sports 5.375% rates for the same thing. If you don't belong to a credit union, you may be able to join one through a family member, your workplace, or an association to which you belong.
8. Some websites will crunch many helpful numbers for you. Using mortgage payment calculator you can learn exactly how much of each mortgage payment will go toward the principal of the loan vs. interest. (This might be useful to know, since the interest portions are deductible on your tax return.)
9. Paying points on your mortgage may or may not be smart. Points are an extra fee you pay (or don't) when you close on your mortgage. They're expressed as a percentage of the loan -- so on a $200,000 loan, two points would be $4,000. By paying points upfront, you can often get a lower interest rate. This is a sensible thing to do if you're pretty sure you'll be sticking with that home and mortgage for many years. If you're planning to only be there a while, skip the points.
10. The world of mortgages isn't a static one. Here's an intriguing, relatively new option -- portable mortgages. In 2003, E*Trade (NYSE: ET) introduced mortgages that you can take with you, transferring them from one house to another if you move. You pay a small premium in interest rates for the privilege, but given that most people these days don't stay put for 30 or even 15 years, this option could well be worth it. I won't be surprised if additional lenders begin offering portable mortgages soon.
There's much more to learn about mortgage options. Wachovia (NYSE: WB), for example, is offering a mortgage designed for teachers. Merrill Lynch (NYSE: MER) introduced blended-rate mortgages last year, featuring advantages of both fixed-rate mortgages and ARMs. Freddie Mac (NYSE: FRE) offers multifamily mortgages. Lots of lenders offer interest-only loans and other extreme mortages.
I hope you found at least some of the above tidbits interesting.Households Refinance Their Mortgages
Home mortgage and home equity credit is the cheapest form of consumer credit available (except parents). Why? Over the period from 2000 through January 2003, the average effective rate on 30-year fixed rate home mortgages has ranged from 7.52 percent (average: 2000) to 6.12 percent in January 2003. Second, interest payment may be tax-deductible expenditures. Third, as inflation raises the market value of the home, the size of the available loan rises, thus providing a hedge against inflation. Finally, since the homeowner and lender already have a relationship, transaction costs are typically less than applying for a loan elsewhere. As these advantages prompt more homeowners to shift more of their borrowing to some form of mortgage or home equity product, other lenders are increasingly left with the market for non-homeowners, which may involve a higher cost and credit risk. This has some interesting implications for non-mortgage lenders in the coming years, and also explains why so many companies that formerly did not do home equity lending (e.g., Household International; MBNA) have entered that market.
Not only is mortgage credit less costly than other forms of credit available to consumers, but its cost has been declining in recent years. Over the period shown in the table below, average effective interest rates on residential mortgages fell 7.52 percent to 6.12 percent. Refinancing a home mortgage allows borrowers to take on additional debt, as well as lower their interest costs. In the first quarter of 2002, 61 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgage loans at least five percent higher than the original amount borrowed. In a very real sense, homeowners own a "bank"-that is, their home. The home provides collateral for the loan that can be obtained with minimal effort, since the lender and homeowner have already established a satisfactory relationship. Furthermore, the interest expense is tax-deductible. On top of that, the value of homes has grown by more than 7 percent just in this past year.
College Loans 101
April 1, 2004- "How hard can it really be?" I thought smugly when I started pulling together all the pieces of the financial application process for my daughter's first year at college. After all, I passed all four parts of the CPA exam in one sitting, and I relentlessly take continuing education on all things financial. And haven't I advised my clients for over 25 years on the basics of education planning--saving early, using home equity loans, scholarships, 529 plans? Plus there is so much help available today, from financial assistance centers at colleges to Web sites and phone operators. I soon found out the hard way how hard it really is. A bewildering mountain of options are available for financing a college education today, and planners should study up on them so they have the smarts to guide their clients through this stressful process. One of the most important financing tools is a program called Parent Plus, a federal program that any lender can choose to offer (including Sallie Mae, the government organization that lends money for college). It is the code word for a loan that is given to the parents of a college student. Parent Plus is not a needs-based financing program; it is open to everyone based on credit history. When qualified, the Parent Plus lender coordinates with the college's financial aid office to determine the exact amount of the loan. The Parent Plus loan has a 3% fee that gets paid to the Department of Education. Once the final payment to the college for the year is made (usually in December or January), the repayment cycle of the program begins (generally 60 days after the final payment). The basic repayment period is over 10 years. There are three options for repayment: The three charts in "Payback Time" below illustrate how each of these options would work, assuming that a student has a $5,000 scholarship, the financial aid office estimates costs of $30,000, and the interest rate is 4.22%. In this case, the total amount borrowed would be $25,000, plus the 3% fee ($750), for a total one-year financing of $25,750. If you are using the first option (principal and interest payments), the monthly payment due to the lender on Feb. 1, estimated over 10 years, would be approximately $263.41 per month. If you don't like the option of paying everything immediately, you can elect the second option (paying interest only). Using this option, interest-only monthly payments would be $90.55 compared to $263.41 for a 10-year principal and interest loan. The interest-only election can be made only for the years the student is in college. Because no principal has yet been paid, the monthly payments will be higher in years five through 10 as you pay off the loan (assuming that the rate remains constant at 4.22%, the monthly payments beginning in year five would be $1,621.80 for 72 months). The third option for repaying the loan is to request forbearance. That's the term lenders use to describe a request to pay nothing while your child is still in school. The interest gets added to the principal, creating a bigger loan to repay as well as higher monthly payments once the repayment begins. So with 72 months left on a 10-year schedule (120 months minus 48 months deferred), you will begin repaying $114,337. The monthly payment (again assuming a 4.22% rate) is $1,800.30. If you choose the forbearance option, you don't lose the ability to pay the loan over 10 years. Over the full 10-year term, payments will be $1,169.60 for the $114,337 loan. If 10 years isn't long enough to repay the loan, a 30-year option might appeal to you. This feature, called the Federal Consolidation Loan Program, provides the same three methods of payment described above, but over a longer term. The consolidation rate is fixed based on an average of the rates on the loans you have received plus 1/8 of a percent. Using the $25,750 loan amount discussed above, let's illustrate the consolidation concept over four years. You borrow $25,750 each year at rates of 2%, 4%, 6%, and 8%, totaling 20%. The average rate, therefore, is 5% (20% divided by 4 years equals 5%). If you consolidate the four annual loans, the interest rate will be 5.125% (5 plus 1/8%), fixed for the term of the loan. The actual loan term is then based on the total amount owed, according to the following table: So let's say that you owe $103,000 ($25,750 multiplied by 4) at the end of four years.Then your monthly loan payments would be $560.82, amortized over 30 years at 5.125%. This illustration assumes you used the interest-only option--paying the interest during the four years of college and financing the $103,000 afterwards. Just like in the 10-year plan, you can also pay interest plus principal or elect forbearance. Plugging in the forbearance numbers from the 10-year plan would leave you a balance of $114,337 at 5.125% for 30 years. The payments would be $622.55 monthly. To further confuse the situation, you can elect the consolidation feature at any time during the four years of college. Some lenders may offer incentives if you pay the consolidation loan on time. After 36 months of timely payment, the rate may be reduced by 1%. A rate of 5.125% thus would drop to 4.125%. If the lender is allowed to withdraw repayments directly from your account, an extra 0.25% discount may also apply, further reducing the rate to 3.875%. Stafford loans are another option for financing college. These loans are given directly to students at more favorable rates than Parent Plus loans, but they have the same favorable term length. That is, a student can also elect to consolidate the loans at any time according to the table above. The trade-off is that the amount that a student can borrow is lower, of course. With Stafford loans, a student may borrow $2,625 in year one, $3,500 in year two, and $5,500 each in years three and four, for a total of $17,125. The Stafford loan rate while the student is in school is based on the 91-day Treasury bill plus 1.7%. As of July 1, 2003, the 91-day T-bill rate was 1.12%, so the rate for the year was 2.82%. This rate is significantly better than the Parent Plus loan rate of 4.22% (91-day T-bill 1.12% plus 3.1% equals 4.22%). Based on the rate in effect as of July 1, 2003, the Stafford loan interest rate is capped at 8.25%. This cap changes every July 1 as the base rate also changes. When paying off a Stafford loan, the student has the same three payment options as the parent has in Parent Plus: When the student starts making loan payments, interest is charged using a repayment index. That index is currently the 91-day T-bill rate as of July 1, 2003, plus 2.3%, or 3.42%. Assuming that the average Stafford loan rate is 2.82% as shown above, a 15-year loan of $17,125 at 2.82% would require a payment of $116.79 per month. However, the repayment index must be used during repayment. Since that rate is 3.42%, then the monthly payment is $121.75. The Stafford loan that we have been discussing above, where interest is paid or added to principal if not paid during the school year, is an unsubsidized loan and not based on need. A subsidized Stafford loan, on the other hand, is based on need, and no interest is charged or needs to be repaid during school. Stafford loans are enhanced when parents don't qualify for Parent Plus loans. In this case, students can borrow an additional $4,000 each in the first and second years, for a total loan of $6,625 and $7,500 in those two years, respectively. In the last two years, students can borrow an additional $5,000 per year. In those years, the total loan available is $10,500 per year. Over four years, therefore, a total of $35,625 is available to students in Stafford loans if their parents don't qualify for a Parent Plus loan. Stafford loans are also available for a fifth undergraduate year if necessary. The maximum amount available with a Parent Plus loan is $5,500, plus an extra $5,000 if Parent Plus is not available. Over five years, therefore, students can borrow $45,625 in Stafford loans, assuming that their parents do not qualify for a Parent Plus loan. In addition, graduate students can borrow $10,000 per year in unsubsidized Stafford loans. They may also qualify for an additional $8,500 per year in subsidized Stafford loans. Thus, the maximum an undergraduate and graduate student can borrow is $138,500. Think that it's safe now for you to put your financial calculator down? Not so fast. There are many more options that your clients can use to get another day older and deeper in (college) debt. For example, banks that are known as preferred lenders offer other types of college loans (as well as Parent Plus loans). My daughter's list of preferred lenders included eight banks, one of which was offering to lend $20,000 per year at prime rate with a 12-year term. In addition, low-interest-rate federal Perkins loans are available from colleges and universities on a need-basis for both undergraduate and graduate students. Funds for Perkins loans come from the federal government and the borrower's college, and they must be repaid to the college, which is the lender. Add in all the scholarship programs available, and the financing options are dizzying. As I found out personally, your clients will need all the help that they can get in negotiating their way through the college financing maze. I'd tell you more about the subject, but I'm busy investigating a new loan program.The rate is tied to the S&P 500 and is hedged by cattle futures on the Chicago Board of Options Exchange. More on repayment choices later. Michael J. Knight, CPA
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