03.23.09 | In School Deferment, No Longer An Option
I’ve been feeling like the bearer of bad news lately. It seems every time I sit down to write a blog it’s about something negative going on in the market. And although this blog is no different, it does have a silver lining. 
It was just announced last week that Sallie Mae, who provides 6 billion dollars per year in student loans, is discontinuing their private Signature loan product in favor of a short-term version that requires students to make interest only payments while in school. This is both good and bad news.
The good news is that a student will save thousands of dollars over the life of their loan as they will avoid negative amortization and will have a shorter loan term. The bad is that the borrower is still required to make monthly payments while in school.
The loan example that SLM likes to use is if a student borrows $17,000 over two years. For the first semester the student would be responsible for $40 per month, but that figure would rise each semester, reaching $160 by the second semester of the students sophomore year. After graduation the student would have a $328 monthly payment for six years. Under this new plan the student would repay about $28,000 total, opposed to the Signature loan program, which held a longer repayment term and would have cost about $45,000.
Still, while students “appreciate” the cost savings on the back end, is is the money on the front end that is the real killer. Not all students can afford to make payments while in school. For those students I am happy to report there are still options.
Fortunately not all lenders are forcing students to make payments while in school. If you are interested in taking out a private loan that still has a loan deferment benefit while in school (click here).
See, I told you I had a silver lining. I’m trying to shed my label as the grim reaper of student blogging.
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I am facing this now. My parents have elected to start paying back $200.oo per month one one of my loans and interest only on a quarterly basis on another.
March 25th, 2009 | #
I cannot pay a loan back while attending school I don’t think any student can do it. Its ridiculous and if the Ceo’s hadn’t been receiving bonus money and exceptional amounts at that we wouldn’t be in this shape our country is selling itself out and living way above its means come back to earth America and leave the space station too. Thats another waste of money as soon as an astroid destroys it soon. what is a matter with our government have they lost their minds. I am so sick of this bail out too another bunch of bull. WHo put us where we are not the ordinary citizen I can assure you.
March 26th, 2009 | #
Glad to know that i can save thousands of dollars over the life of my loan.
March 27th, 2009 | #