Student Loans 101

Student Loans 101
Copyright © 2007-2008 Bernard Pruett


Student loans have become a common form of financial aid, giving prospective college students the opportunity to further their education. What's even better is that college student loans now
come in a variety of shapes and forms to appeal to more college candidates that have different needs and qualifications.

The United States Government works hard to provide eligible students with an equal chance to gain access to federal student loans regardless of bad credit or past financial hardships. Private student loans are also offered to students through banks and other financial institutions based on specific criteria, such as financial need and grade point average. Student borrowers also have the option of student loan consolidation as these loans mature. Although there are distinct differences between federal student loans and private student loans, some pros and cons
common to all college student loans are covered below.

A student loan is similar to any other type of loan in that it is money borrowed from a lender that has to be repaid in installments over a specified period of time. Like other standard loans, there is a cost associated with borrowing money. An interest expense is charged on the student loan by the lender that has to be paid in addition to the principal loan amount. Although student loans and conventional loans have various similarities, there are some features that make college loans
exceptionally more appealing to borrowers (i.e. students and parents) compared to standard loans.

One key benefit associated with student loans is that interest rates are significantly lower than interest rates charged on standard loans. This helps to alleviate the financial burden on
students who are typically at an age where income is limited. Other than competitive interest rates, lenders generally offer flexible student loan repayment terms that help delay the
financial pressure on students, by allowing them to wait until after graduation to start repaying the loan. Both federal student loans and private student loans generally give students a
6-month grace period, meaning that students don't have to start repaying their loan until 6 months after graduation. The grace period gives students adequate time to get settled into a new job and start earning a salary that is sufficient enough to meet monthly student loan payments.

Another advantage associated with both federal student loans and private student loans is the tax savings provided to students and parents. Students and parents who pay tuition fees for higher education are subject to tax benefits that (1) decrease their income subject to tax and; (2) provide tax credits. Tax credits basically result in a decrease in the amount of tax you are
required to pay by the Internal Revenue Service (IRS) at the end of your tax period. Thus, tax benefits are another feature that helps ease the monetary demands of student loans.

Although student loans relieve college students of financial burden in the short-term, the long-term financial burden that emerges after graduation can be extremely overwhelming for those who do not prepare themselves. The average student debt is estimated to be around $17,000 and the typical loan repayment period can last anywhere from 10 years to 30 years. These figures are no exaggeration and can be very daunting for someone just entering the career world. Some college graduates simply do not know how to fathom the fact that they owe such a large amount of money and end up overlooking their obligation to pay off their student debts. Other college graduates with newly found jobs simply do not know how to budget their income in a way that allocates sufficient funds to meet their monthly student loan payments. The result of these scenarios, where college graduates are irresponsible about paying off their debt obligations, is a severe burn to one's credit rating. Along with other major consequences, college graduates that have a series of missed payments and/or late payments on their student loan plans can cause severe damage to their credit score. Your credit score is an important aspect of your financial identity, especially as you get older and start earning an income sufficient enough to rent or invest in real estate and other long term assets. Having bad credit can seriously hinder you from financial endeavors in the future, such as getting approved for direct loans and mortgage loans. Financial responsibility is extremely beneficial for all individuals to learn and practice at a reasonably young age to prevent problems in the future.

Budgeting wisely is an important step one can take to achieve financial responsibility. As soon as you enter into the career world, you should immediately write out a budget that allocates
sufficient funds to pay for all your monthly expenses, such as your rent or mortgage, car loan payment, student loan debt, food, gas, and insurance. After you have assigned money to cover your immediate monthly expenses, you should then create a savings fund and allocate approximately $50 to $200 per month to the fund. A savings fund is very useful in unexpected emergencies, such as hospital bills and car repairs, and helps ensure that money is available when needed in urgent situations. Students, student graduates, parents, and other borrowers need to understand the importance of financial responsibility and keeping up with monthly payments, in order to build a healthy credit report for the future.

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Bernard Pruett writes for http://www.SecureLoanConsolidation.com
Visit their website to learn about student loans
(http://www.secureloanconsolidation.com/student_loan) and
(http://www.secureloanconsolidation.com/calculators.asp)
student loan consolidation. Their network of debt loan
lenders provide college financial aid, loan consolidations,
bad credit debt help, home loans, etc. ============================================================


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Why Looking at Federal Student Financial Aid is More Helpful

By Muna wa Wanjiru

While most parents start saving from the beginning for their children’s college education there are still times when extra help is required. This help can come in different forms, and you will find many college scholarships which will be of great help. There are also times when looking at federal student financial aid is more helpful.

You should start exploring these many avenues when your child first enters high school without waiting until they are almost ready to enter the university. This will only put a strain on you financially until you can apply for and get federal student financial aid, and this might not a financial burden that you’re equipped to carry at that particular time.

This in turn will limit the scope of your where your child can look into, to go to university, which is a greater incentive to check out everything that you can about the federal student financial aid now before it is too late and the changing times catch up with you in the form of astronomical college fees.

Many times you can get the required information from the financial aid office in various universities. Your local library is yet another place where you can find information about federal student financial aid. Since there are different versions of this financial help you should choose at least about several different programs to be on the safe side.

Some of these programs are more popular than others for a variety of reasons, and if this is the case you might find that your chances for getting these particular federal student financial aid programs are very low indeed. But if you don’t apply to them you will never know if you could have gotten through or not so it’s always a good idea to put in your application for as many of these as you need.

Of these programs the federal student financial aid that you can get from the Stafford Student Loans programs is one of the most popular ones, and therefore something which you might want to aspire to, but not hold out any hopes for. There is no reason for despair though. There are more than enough federal student financial aid programs for you to apply to and not all of them are besieged by thousands of students applying for it.

You will find that if you do your homework right, then you can find a federal student financial aid program that is right for you, and that isn’t as highly popular as the Stafford Student Loans programs is. You should still apply for the Stafford Student Loans program, but to make sure that you have a fighting chance, you should also apply to other federal student financial aid programs as well.

About the author:
Muna wa Wanjiru is a Web Administrator and Has Been Researching and Reporting on Student Loans for Years. For More Information on Federal Student Financial Aid, Visit His Site at Federal Student Financial Aid

Article Source: http://www.Free-Articles-Zone.com

Scholarships not Working for You Neither, Huh?

We're going to college, and we need cash. We have tuition and food, housing, books... like I said, we need cash. We hear about these billions of dollars of unclaimed scholarship money just floating around, yet you can't seem to get your hands on any of it, nor on any other form of financial aid. We're out here working like dogs, trying to make time to study an keep from losing our insanity, until we finally just give up. This sounds like a pretty big problem. What to do?

First of all, you should know that there aren't billions of dollars out there just waiting to fall in your lap. In fact most counselors and financial aid assitants wonder why this rather enormous figure is stated so often, but its not the case. So don't feel bad or think you "suck" because you haven't won some of this dough. However, there IS some money to be made out there that many people either overlook or figure it isnt worth pursuing. Trust me, its worth taking a look at and worth pursuing.

Usual Suspects

Your first destination should be the government. The FAFSA needs to be the first thing you do. You may be eligible for grants or other special awards. Then go to your school to see if they have any special scholarships that are only available to students of that college or university. After that, sign up to fastweb.com and scholarship.com and become familiar with those two sites, they are two of the most used on the web.

There's something for everyone!

People commonly think that only minorities and people with really low incomes and awesome grades can get scholarships. This is just not so. There are plenty of scholarships out there that are aimed at people in certain national or local clubs, that serve different interests such as drawing, writing, or a sport, and even some that are strictly for those with work experience. Tons of scholarships for college students are aimed at specific majors and corresponding social networks, for example the Audio Engineering society and American Medical Association. Be creative when searching. There are plenty of companies giving money away in hopes of attaining a student base of prospective future employees. If you're working on computers, for example, see what top technological companies such as Qualcomm and IBM have to offer, if you're working in finance and economics, checkout some big time (and small time) Wall St. corporations, for instance.

Also, don't forget to checkout your own community. YMCA, churches, local youth groups and sports teams, they all give out money to deserving individuals, so do some homework on your hometown before moving on to bigger venues.

The essay contest

These are wonderful. Checkout what you like, what you know a lot about and are passionate about, and write an essay to submit to a contest or scholarship offer. Get friends in on it...help each other out and promise to share earnings.

Why isn't this EASY?

Now, I don't want to brag, but I won quite a few scholarships in my day. However, I remember always getting questions about "how do you do it," "you're so lucky," and so on. Well, it really isn't that complicated-- its going to take some work and dedication. Start early, make a list of scholarships, plan for scholarship-work time, and get busy. Don't feel bad when you don't win, most students are happy to win a few because that's usually what it takes. Just keep focused on what you're trying to do, hope for the best, and do NOT stress out about it.

Alternatives

There are a few alternatives. Never resort to credit cards. Ever. What you want to look for are student loans because they have lower interest rates and usually have friendlier grace periods and payback periods. Don't worry about being in student loan debt upon graduation...$10000-$15,000 is not bad at all (if being repaid in ten years). Stafford loans are the most common. They offer around $2600 for first-year, $3500 for second year and $5500 for third year students. Perkins loans usually don't have to be repaid until nine months after graduation and you have 10 years to pay. Checkout private loans, maybe from loan-specialists companies and your own school. Checkout the American Education Society which also provides private loans for people.

Don't Stress It

There is money to be made, just be focused, dont't get discouraged, and work hard at it. Well, what are you waiting for?

Vincent St. James is a writer and researcher for thecollegeguys.com, where you can find more of his work related to finance, health,and movies.